After resolving the JPEX controversy, there has been a notable increase in the approval of crypto product by regulatory bodies in Hong Kong. This information was disclosed by a representative from OSL, a cryptocurrency exchange platform under BC Technology Group.
Furthermore, BC Technology Group, serving as the parent company of OSL, observed authorities in Hong Kong swiftly granting approval for various crypto-related offerings.
The aftermath of the JPEX incident unfolded with a warning from the Hong Kong Securities and Futures Commission (SFC) in September 2023. The warning specifically addressed false licensing claims made by the crypto exchange. This development prompted heightened regulatory scrutiny in the local crypto industry.
However, despite heightened oversight, there’s a simultaneous acceleration in approving cryptocurrency products, noted Davin Wu, CFO at BC Technology Group.
JPEX Fallout: Regulatory Crackdown, Closure, and the Impact on Crypto Product in Hong Kong
The JPEX situation began with regulatory warnings, and the crypto exchange ultimately ceased operations in Hong Kong, attributing it to a liquidity crisis. The platform faced allegations of misconduct, including rug pulling and money laundering, leading to arrests and asset seizures by authorities.
Wu emphasized that the regulatory response to the JPEX incident has resulted in enhanced monitoring of non-compliant digital asset trading platforms. He noted that regulators may now take measures to prevent these entities from aggressively advertising their services, as witnessed in locations like MTR Stations in the past.
Simultaneously, a representative from fintech firm Sifang Innovative Hong Kong, Chen Yaowen, highlighted the potential pivotal role that banks could play in driving the adoption and development of virtual assets in Hong Kong.
Banks’ Role in Hong Kong’s Crypto Sector: Opportunities and Regulatory Considerations
Yaowen expressed the view that the involvement of banks in the crypto sector could be advantageous, leveraging the trust the public places in traditional financial institutions. Furthermore, Yaowen anticipated that banks might explore the creation of tokenized virtual assets, potentially storing them in custody wallets in the future.
Additionally, in discussing the broader regulatory landscape, Yaowen suggested that the participation of the China Securities Regulatory Commission in the review and approval processes related to virtual assets could serve as a positive catalyst for the sector in Hong Kong.
Earlier in the year, the Hong Kong Monetary Authority (HKMA) took a proactive step by encouraging banks. The aim was to address reported hesitancy among local financial institutions when it comes to engaging with crypto exchanges. The HKMA urged banks to consider accepting crypto businesses as clients.
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