- The costs of setting up infrastructure, filing and other processes
- The most expensive licenses cost TradFi companies
Foresight News reporters report on the digital asset licensing process (VASP) in Hong Kong. The process costs candidates anywhere from HK$20 million to HK$200 million ($2.55 million to $25.5 million).
The final figure depends on many things. Traditional financial institutions (e.g., banks) are the most expensive to obtain a license. After all, they need to build blockchain infrastructure from scratch. But even for experienced crypto firms, approval in Hong Kong incurs high costs.
And amid growing scrutiny from U.S. regulators, crypto firms are eyeing Hong Kong. It has a favorable strategic location and industry-friendly regulations.
As of June 1, a new regulatory framework went into effect in the region. It provides investor protection, but also creates a favorable environment for cryptography. Companies operating in Hong Kong must disclose their financial and user information to the regulator. Exchanges that don’t comply with such requirements are required to leave the market by mid-2024.
The companies OKX, BitgetX, HashKey Pro, OSL and Gate.io have already licensed in the region.
Hong Kong plans to become a virtual asset center and operate as “China’s gateway to the cryptocurrency world.”. However, Singapore and Dubai remain strong competitors in the region.