Hong Kong crypto exchanges and their licences

What does a licence mean for Hong Kong crypto exchanges?

The SFC names virtual asset trading platform operators as a regulated category inside its virtual asset regime. A licensed operator has applied to the SFC and accepted its requirements, and the SFC publishes lists of licensed platforms. A customer can therefore see, in public, which operators the regulator has licensed. That public record is the main advantage of a regulated route.

A licence does not guarantee profit and does not remove price risk. It means a named firm answers to a named supervisor for the activity it performs. In a fall, that difference decides who you can ask, and which rules the firm must follow when customers want their assets back.

How do you read the SFC list of licensed Hong Kong crypto exchanges?

Start from the SFC list and not from the app. Open the list, find the platform by its legal name, and note the licence status and any conditions shown. If the platform does not appear, treat that as a stop sign until the firm explains in writing which licence covers its services.

Update your note whenever the list changes. Lists change over time, and a platform that was absent last quarter can appear this quarter. A dated copy of what you saw is your evidence, and it takes seconds to save.

How do you match a crypto exchange app to its licensed entity?

Brand names and legal entities differ. The app shows a brand, the terms of service name a company, and the licence belongs to a company. Find the company name in the terms, and compare it letter by letter with the name on the list. A similar name does not count as a match. Screenshots with the date make the match easy to prove later.

Check also that the services you use fall under the licence. A firm can hold a licence for one activity and offer another beside it. Ask the firm which of its services the licence covers, and keep the answer. An exchange that answers clearly and quickly shows that it has done this work before.

What does the JPEX case teach about checking Hong Kong crypto exchanges?

In September 2023, amid criticism of the SFC’s response to the JPEX case, the SFC said it would not publish a list of businesses applying for cryptocurrency licences. About a week later it reversed course and said it would publish the list. The episode shows that transparency about applicants matters to customers.

The lesson for a customer is practical and does not depend on the facts of any one firm. An application is not a licence, a promotion is not a licence, and only the current list answers the question. Make the list your reference point, and read it before each new deposit. Save a dated copy of the list each time, so your own record shows what the regulator published on the day you decided.

How should a Hong Kong crypto exchange hold customer assets?

Under the principle of same business, same risks, same rules, customer assets deserve the care that a broker gives to client money. Ask whether the exchange holds customer assets apart from its own, where the tokens sit and who controls the keys. The answers should be in writing, in the terms or in a policy document. If a document does not exist, ask for the answer in an email and file the reply.

Ask what happens if the exchange fails, and who runs the process. A clear answer describes how customers recover assets. A vague one tells you the case has not been planned. Because a fall raises withdrawal requests, custody terms are tested at exactly the moment you need them.

What reserve and withdrawal terms should Hong Kong crypto exchanges show?

Look for a reserve report that is dated, names the assets covered and compares them with customer balances. Look also for plain terms on withdrawals, trading halts and the handling of a stablecoin that slips below its peg. Terms that cover bad days in clear language show a firm that has thought about them. Compare reports across two quarters to see whether the numbers move in a way that fits the story.

Test the process when markets are calm. Withdraw a small amount to your own wallet, and note the time and fees. A venue that handles a small test well gives you some evidence about operations, and a venue that struggles gives you a reason to keep balances low.

How can you turn these checks into a routine for Hong Kong crypto exchanges?

Put the checks on one dated page: list, entity, scope, custody, reserves and a small withdrawal. Repeat them each quarter and after any news about the exchange, such as new ownership or new products. A trail of dated pages shows a trend, which is more useful than one snapshot.

Size your balance on any exchange to a loss you can carry, and run a 50% Bitcoin fall test on the total. The Λ simulator gives a first reading of fragility, and the EQOS Asia contact page opens a 30-minute review of your case. See also the wider crypto crash series.

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About the author

Stéphane Jambu

President, EQOS Forecast Asia

Stéphane Jambu leads EQOS Forecast Asia and works as a consultant in e-commerce, search visibility, and AI. LinkedIn profile