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Securities and Futures Commission Warning
The Securities and Futures Commission (SFC) of Hong Kong has issued a warning regarding the illegal activities of crypto exchange MEXC, which does not comply with current Hong Kong crypto regulations and operates without a license.
SFC Press Release
In a recent press release, the SFC stated that MEXC has been actively promoting its services to investors in Hong Kong, despite not having obtained a license from the SFC or even applying for one.
Legal Offenses in Hong Kong
According to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, it is a criminal offense to conduct business as a virtual asset service provider, such as operating a virtual asset exchange, in Hong Kong without the necessary license.
Risks Highlighted by the Regulator
The regulator added that marketing such services to Hong Kong investors without proper authorization is also prohibited. SFC has added MEXC to the Suspicious Virtual Asset Trading Platforms Alert List.
Regulatory Issues and Past Incidents
Notably, MEXC has encountered regulatory issues in the past. In April of last year, Japan’s Financial Services Agency revealed that MEXC had been operating in the country without proper registration. Furthermore, Germany’s Federal Financial Supervisory Authority also flagged MEXC for operating without authorization as recently as October.
Hong Kong Crypto Regulations
Hong Kong is actively working to establish a robust regulatory framework for the cryptocurrency industry. The SFC initiated consultations on regulatory rules for the sector last year. The city-state’s Virtual Asset Service Providers licensing regime came into effect in March, requiring crypto exchanges to register with the regulator.
Application Deadline and Licensing Status
The deadline for virtual asset trading platform (VATP) crypto license applications in Hong Kong passed on February 29, with the number of applicants reaching 24. Major crypto exchanges with ties to mainland China or Hong Kong have either applied for licenses directly or through their affiliates.
Approved and Declined Applications
The SFC will announce approved and declined applications on a public register by June 1, 2024. After securing approval, virtual asset trading platforms can onboard new retail and institutional crypto investors and start marketing in Hong Kong.