Crypto competition heats up in Hong Kong with Bybit and HKVAEX license bids

Cryptocurrency exchange Bybit has officially submitted a license application to the Hong Kong Securities and Futures Commission (SFC) to operate as a “virtual asset trading platform.” This move comes as part of Bybit’s strategic expansion into the Asian market, leveraging Hong Kong’s favorable regulatory environment for crypto-related businesses.

Bybit’s license application in Hong Kong

The company prominent cryptocurrency exchange, announced on Wednesday that it has submitted a license application in Hong Kong to establish itself as a virtual asset trading platform. The application was made through the entity Spark Fintech Limited, and it marks a significant milestone for the exchange’s growth strategy in the Asia Pacific region.

Obtaining the Virtual Asset Trading Platform (VATP) license in Hong Kong holds great importance for Bybit, as the city’s strategic location and well-established financial infrastructure make it an ideal base for both operational and institutional activities, serving the Asia Pacific market effectively.

Bybit’s application is one among several others currently under review by the Hong Kong Securities and Futures Commission.

Growing interest in Hong Kong’s crypto market

In recent years, Hong Kong has positioned itself as a welcoming jurisdiction for cryptocurrency-related businesses, in stark contrast to the stricter regulatory stance adopted by its neighboring mainland China. 

Hong Kong’s proactive approach to cryptocurrency regulation began in June 2023 when it officially introduced its licensing regime for virtual asset trading platforms. This framework allowed licensed exchanges to provide retail trading services.

To date, the Hong Kong SFC has granted VATP licenses to two platforms: HashKey and OSL, further enhancing the city’s reputation as a cryptocurrency hub.

Spot crypto ETFs on the horizon

Hong Kong’s regulatory flexibility also extends to the development of cryptocurrency exchange-traded funds (ETFs). The Hong Kong Monetary Authority and the SFC jointly announced in December that they had reviewed their existing policy to pave the way for spot crypto ETFs. 

This initiative opens up new avenues for investment and capitalizes on the growing demand for crypto-related financial products.

Livio Weng, CEO of HashKey Exchange, revealed that approximately ten fund companies have expressed interest in launching potential spot crypto ETFs in Hong Kong, demonstrating the growing investor appetite for such products.

Market expansion and competition

Notably, HKVAEX, a crypto platform with purported ties to Binance, also applied for the same VATP license further illustrating the competition and demand within the Hong Kong crypto market.

As the cryptocurrency industry continues to evolve, regulatory frameworks play a crucial role in fostering trust and security for investors and businesses alike. Hong Kong’s approach of balancing regulation with market openness appears to be attracting both established and emerging players in the crypto space.