Hong Kong is seeing a huge increase in crypto license applications.

The Hong Kong Securities and Futures Commission (SFC) has received 18 crypto license applications from local and international players over two months.

In the year On February 20, Huobi HK, the arm of Hong Kong crypto exchange Huobi, applied for a virtual asset trading platform license with the Hong Kong SFC, a local report confirmed. In total, 18 crypto exchanges, including Crypto.com, OKX, Bybit and DFX Labs, have submitted applications for the same license as of mid-November 2023.

As part of the licensing requirements, applicants must pass rigorous due diligence checks, which are more extensive than traditional financial audits such as proofs of assurance (PoR). As a result, Web3 companies have to spend up to $25 million to build their applications.

Hong Kong's recent openness to exchange licensing has also attracted traditional brokers such as Chinese stockbroker Tiger Brokers. In January, the broker upgraded its Type 1 SFC license to include crypto trading for professional investors and financial institutions in Hong Kong.

Speaking to Cointelegraph at the time, John Fei Zheng, managing director and chief financial officer of Tiger Brokers, said:

“In addition to stocks and options, crypto is becoming an important asset class. So it's a natural extension of our broker-dealer business to add a new asset class, and the core Web3 technology is integrated with Tiger's fintech background.”

The Hong Kong regulator also received its first application for a spot Bitcoin (BTC) exchange-traded fund (ETF) on January 26 from Harvest Hong Kong, one of China's largest fund managers.

Related: Hong Kong SFC issues warning on fake crypto exchange pretending to be MEXC

When Hong Kong adopted crypto, it set a minimum insurance requirement of 50% for licensed crypto exchanges to handle client assets.

As previously stated by the OSL Exchange, the 50% insurance coverage minimum applies to all assets in custody. At the same time, OSL announced that it has signed a two-year partnership with Canopius, the underwriter of Lloyd's of London, for an insurance policy covering 95% of the user's assets.

Magazine: ‘Crypto Is Inevitable' So We're Going ‘All In': Meet Vance Spencer, Permabul