Hong Kong recently introduced a compulsory licensing regime for centralized exchanges, which allows retail investors to participate. Binance-backed HKVAEX is seeking a license under this regime. However, observers highlight the difficulties Binance will face in obtaining a license given its legal problems in other countries. The Hong Kong Monetary Authority (HKMA) has “strict requirements” for virtual asset trading platform applicants, as well as their significant shareholders, ultimate owners or other controllers.
Any person or entity falling within these categories who fails to comply with anti-money laundering (AML) regulations in Hong Kong or any other jurisdiction, or who has been convicted of offenses related to money laundering or terrorist financing, will face increased scrutiny from SFC parties in the application process. Such breaches are considered to be directly relevant to the SFC’s assessment of a candidate’s suitability and integrity.
Binance’s licensing prospects in Hong Kong remain uncertain, according to Elizabeth Wong, SFC licensing director and head of Fintech. She cited the lack of clarity around Binance’s go-to-market strategy and structure as a key factor. This ambiguity is further compounded by Binance’s absence from the list of virtual asset trading platform operators seeking SFC licenses.