Cryptocurrency Exchange License in Hong Kong

Hong Kong is one of the largest financial centers in the world. This jurisdiction was one of the first to legalize cryptocurrencies and start issuing permits for activities related to digital assets. However, to store, exchange, or conduct any other transactions with virtual money, you must obtain a cryptocurrency license in Hong Kong. Lawtter Solutions offers its services in obtaining all the necessary permits.

Benefits

Benefits of Obtaining a License in Hong Kong

Hong Kong is not the only jurisdiction that offers the opportunity to obtain a cryptocurrency license. However, it does have several essential advantages over other countries and regions that provide the relevant authorizations. The main ones are as follows.

1

Full legality

Licensing cryptocurrency exchanges in Hong Kong allows you to conduct any activity related to digital assets, as they are fully permitted in this jurisdiction.
2

Excellent international reputation

Hong Kong is one of the world's financial centers. Obtaining a license allows you to increase confidence in your crypto exchange or exchanger.
3

Availability of benefits for business

Given that the sphere of digital assets is just beginning to develop in this jurisdiction, Hong Kong has provided tax incentives to attract cryptocurrency companies.
4

The most significant number of cryptocurrency exchanges

Hong Kong is convenient for exchanging and cashing out cryptocurrency or buying digital assets for fiat money. Here is the highest density of Bitcoin ATMs in the world.
5

The possibility of providing various services

In addition to cryptocurrency exchange, obtaining authorization for other financial services, such as cryptocurrency lending and crowdfunding, is possible.
6

If a cryptocurrency company does not operate in Hong Kong, it does not pay taxes to the local budget.

Thus, Hong Kong can be considered a desirable and profitable jurisdiction for running a cryptocurrency business.

Types

Types of Cryptocurrency Licenses in Hong Kong

Before getting a license for cryptocurrency exchange in Hong Kong, it is necessary to know the main types of documents issued in the jurisdiction. There are two types in total:

  • Exchange of cryptocurrency for fiat money. This license is called an MSO License and allows licensed companies to buy or sell virtual assets.
  • Exchange or any other actions with security tokens. This license is called an SFC License and implies buying, selling, and exchanging security tokens or other cryptocurrency assets classified as securities.

 

Obtaining a license is unnecessary if a company intends to exchange cryptocurrencies for cryptocurrencies. In this case, the legislation provides for work without authorization. Nevertheless, you can’t do without a license when cashing out cryptocurrencies or selling them for fiat money.

 

A license for exchanging cryptocurrencies is not the only document that can be obtained by a company that operates with digital assets. For example, receiving a permit to store crypto assets (cryptocurrency wallet license), cryptocurrency lending, crypto-brokerage, or cryptocurrency crowdfunding is possible.

Requirements

Requirements for Opening a Company

Applicants must meet several requirements to receive a license. Firstly, it concerns the registration of the company. Only an organization registered in the jurisdiction can obtain a license for cryptocurrency exchange in Hong Kong. When registering, the following requirements must be met:

  • There must be at least two Responsible Officers (ROs). One of them must be a tax resident of Hong Kong and have citizenship, residence permit, or permanent residence permit.
  • The company should employ only personnel with relevant education and experience. Certificates should confirm this.
  • The company should have an AML/KYC policy in place. This document should regulate client identification rules and measures taken to protect against fraudulent or other illegal activities for clients. AML/KYC policy and compliance with its requirements are among the most critical indicators of an organization’s reliability.
  • Confirmation of sufficient funds in accounts. The company must have sufficient assets to conduct cryptocurrency exchange activities.

 

It is also essential to have reporting schemes in place if suspicious activity is detected among clients.

 

To conduct cryptocurrency activities, companies most often register in the form of ownership, named “Company limited by shares.” It is the local equivalent of a limited liability company. If a company operates outside of Hong Kong, it does not need to pay taxes to the local government.

General

What Do You Need to Get a Cryptocurrency License?

The Securities and Futures Commission (SFO) is the licensing authority for cryptocurrency exchanges in Hong Kong. To obtain a cryptocurrency license, applicants must meet the following requirements:

  • Confirm that the company can safely store crypto assets.
  • Provide a developed AML/KYC policy.
  • Prove that there is no conflict of interest.
  • Provide customer eligibility criteria for cryptocurrency transactions.
  • Confirm the ability to comply with established cybersecurity regulations.