Web3 firms in Hong Kong go all-in on crypto licenses, investing millions in regulatory compliance, reveals Foresight News report.
In a race to secure Virtual Asset Service Provider (VASP) licenses, Web3 firms in Hong Kong are shelling out substantial amounts, with expenditures ranging from 20 million to 200 million Hong Kong dollars ($2.55 million to $25.5 million), according to a report by Foresight News released on June 27.
High Expenses And Infrastructure Challenges Drive Costly License Acquisition For Web3 Firms
The surge in expenses is attributed to the absence of pre-existing infrastructure for traditional financial institutions in the crypto realm. The firms have had to establish everything from scratch, including products and teams, resulting in significant costs associated with obtaining the licenses. Even experienced cryptocurrency institutions find the acquisition expenses quite steep.
Analysts at Foresight News revealed that several Hong Kong subsidiaries of prominent exchanges, including OKX, BitgetX, HashKey Pro, OSL, and Gate.io, have already initiated their operations. Notably, OKX has rapidly expanded its presence, boasting 8,800 registered users in Hong Kong and a cumulative trading volume of $150 million as of June 27, in the special administrative region (SAR) of China.
Hong Kong Implements Stricter Vasp Licensing Requirements To Enhance Cryptocurrency Industry Regulation
To regulate the cryptocurrency industry more effectively, Hong Kong introduced new VASP licensing requirements for crypto exchanges on June 1. Among these regulations, firms are now obligated to disclose user statistics and company financials to the Securities and Futures Commission of Hong Kong for regulatory approval. Failure to comply with these requirements will result in exchanges being forced to halt operations in the SAR by the middle of next year.
Simultaneously, on June 1, the Hong Kong Virtual Asset Consortium unveiled its virtual asset index. The index includes leading cryptocurrencies such as Bitcoin and Ether, as well as altcoins and privacy tokens. The consortium aims to provide ratings services and indexes to facilitate retail crypto trading within the SAR. The initiative has garnered support from prominent players in the industry, including Huobi, KuCoin, and Bitget.
As the crypto landscape in Hong Kong continues to evolve, the investment into acquiring VASP licenses showcases the commitment of Web3 firms to operate within the regulatory framework while contributing to the growth of the digital asset ecosystem in the region.
