Hong Kong has recently opened its doors to crypto with a new licensing scheme. However, according to sources who spoke to Coindesk, “obtaining a new license could cost anywhere between $12 million and $20 million.”
The amount is calculated by factoring in operating costs involved in the license development, as well as fees necessary for vendors for the application itself, including consultants, lawyers, and insurance providers.
Beating everyone to the punch, HashKey and OSL became the only local exchanges with crypto trading licenses in Hong Kong.
Hashkey announced it’s the first exchange in Hong Kong to receive a trading license under the new regulations. The company is now permitted to start retail token trading locally.
The company reported that it will be able to “expand its business scope from serving professional investors to retail users.”
On the other hand, the high entry price for licensing in Hong Kong may eliminate the chance for smaller companies to enter the market. A $20 million bill may be an impossible barrier for SMEs in the crypto space to overcome, regardless of the financial potential of finally accessing the Chinese market.
Since July, the Hong Kong Monetary Authority (HKMA) has been putting in efforts to push forward the development of digital currencies as a primary form of trade. As part of these efforts, The country’s banking regulator has been nudging local financial institutions to find ways to accommodate the needs of crypto exchanges while meeting regularly to find ways to meet the needs of such clients.
The development of the digital currency market in Hong Kong came in collaboration with banks such as HSBC (HSBA.L) and Standard Chartered (STAN.L). The process involves developing the infrastructure necessary for licensed crypto regulators to access banking services in the country easily.
Simultaneously, companies such as OKX, Bybit, and Huobi, whose founders are of Chinese origins, have announced their intentions to bid for the new license.
However, Haskey has been vocal about their concerns regarding the market’s stability. “If Hong Kong can suddenly say that it is crypto-friendly as if it’s a switch, that switch can be just as suddenly turned off should things get difficult,” reported the chairman of Hong Kong crypto exchange HashKey.
On the positive side, the chairman reported that the Hong Kong government “is very serious about building an international virtual asset center ”