Web3 Firms Invest Millions in Hong Kong Crypto Licenses

Web3 Firms Invest Millions in Hong Kong Crypto Licenses

In a recent update from a Hong Kong-based news outlet, it has been revealed that Web3 companies operating in the region are investing significant sums ranging from 20 million to 200 million Hong Kong dollars, equivalent to $2.55 million to $25.5 million. towards the acquisition of licenses as Virtual Asset Service Providers (VASPs). The move highlights the robust financial commitment made by these firms to secure the necessary licensing in compliance with regulatory requirements.

Insiders familiar with the matter shed light on the situation, elucidating the reasons behind the substantial expenditure associated with obtaining VASP licenses. They emphasized that traditional financial institutions, lacking pre-existing infrastructure in the cryptocurrency realm, have had to build everything from scratch, resulting in significant costs.

Even for seasoned cryptocurrency establishments, acquiring the necessary license comes at a considerable expense, further underlining the financial commitment required to navigate the regulatory landscape.

Notable analysts at Foresight have highlighted that several Hong Kong-based subsidiaries of prominent exchanges, including OKX, BitgetX, HashKey Pro, OSL, and Gate.io, have already initiated their operations. An update as of June 27 reveals that OKX, in particular, has experienced remarkable growth, amassing an impressive user base of 8,800 registered individuals in Hong Kong. The cumulative trading volume on the platform has reached $150 million within the Special Administrative Region (SAR) of China, underscoring the robust activity witnessed in the local cryptocurrency market.

On June 1, Hong Kong unveiled new VASP licensing requirements for cryptocurrency exchanges. Among many items, firms must make proper disclosures on user statistics and company financials to the Securities and Futures Commission of Hong Kong for regulatory approval. Exchanges that do not abide by the requirements will be required to cease operations in the SAR by the middle of next year.

Earlier FinWatchers reported the entrance of HSBC, the largest bank in Hong Kong, into the digital asset market with the launch of its inaugural local cryptocurrency services. This development marks a significant milestone for the banking giant as it now enables its customers to partake in the buying and selling of Bitcoin (BTC) and Ether (ETH) through the utilization of exchange-traded funds (ETFs). HSBC's foray into the realm of cryptocurrencies reflects a growing recognition of the potential of these digital assets within the financial industry.

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