According to a report by local news outlet Foresight News, Web3 firms in Hong Kong are spending between 20 million to 200 million Hong Kong dollars ($2.55 million to $25.5 million) to acquire Virtual Asset Licensing Regime (VASP) licenses, as they compete for talent in the industry.
Analysts at Foresight noted that subsidiaries of exchanges such as OKX, BitgetX, HashKey Pro, OSL, and Gate.io have already begun operations in Hong Kong. However, complying with the new VASP licensing requirements set by Hong Kong regulators has been costly for firms, even for experienced cryptocurrency institutions.
New VASP Licensing Requirements in Hong Kong
Hong Kong unveiled new VASP licensing requirements for cryptocurrency exchanges on June 1, which demand proper disclosures on user statistics and company financials to the Securities and Futures Commission of Hong Kong for regulatory approval. Exchanges that fail to comply will be required to cease operations in the Special Administrative Region (SAR) by mid-next year.
Hong Kong Virtual Asset Consortium (HKVAC)
In addition to the new licensing requirements, the Hong Kong Virtual Asset Consortium (HKVAC) published its virtual asset index consisting of major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), alongside altcoins and privacy tokens on the same day. The organization seeks to provide ratings services and indices to facilitate retail crypto trading in the SAR and is supported by Huobi, Kucoin, Bitget, and others.
Overall, the move towards greater regulation in Hong Kong’s crypto market represents a significant step forward for the industry, providing a framework for companies to operate within and offering greater protections for investors. However, the high costs associated with obtaining licenses may create barriers to entry for smaller firms and limit competition in the market.