Hong Kong’s regulator says unlicensed VASPs must stop working in May.

The Hong Kong government's Financial Services Department has highlighted applications for unlicensed virtual asset service providers (VASP) by a February 29 deadline and said those that have not been approved must cease operations by May 31.

Hong Kong Financial Services and Treasury Secretary Christopher Hui wrote in an official blog post that some VASPs will have a transition period before the Securities and Futures Commission (SFC) establishes a licensing system in Hong Kong. Allowing VASPs to apply for licensure.

“These service providers must submit their license applications on February 29 this year if they want to continue operating in Hong Kong,” Hui added.

According to the regulator, if the existing service providers fail to meet the necessary requirements set by the SFC, they will receive a “notice of default”. The notice means they must stop working on May 31 or within three months of receiving the notice. In addition, all service providers who have not submitted their applications by February 29 are expected to cease operations by May 31.

As the deadline for submitting license applications to meet the requirements is approaching, Hui wrote that the SFC is already preparing for enforcement. This includes notifying unauthorized service providers and increasing advertising efforts.

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Hui warned investors about the volatility and value of virtual assets. Hui argued that many digital assets “have no intrinsic value” and prices are volatile. He explained.

“Before engaging in related investments, it is important to understand the details and consider the risks involved. For VA transactions, only platforms officially licensed by the SFC should be used.”

Hugh added that unlicensed operators and service providers may not comply with regulatory requirements and that such platforms “may be involved in fraud”.

The authority said the regulator is also considering regulating over-the-counter (OTC) trading sites. In the year In 2023, OTC sites played a special role in some cases of fraud involving trading platforms. As a result, they said they would begin consultations on the proposed regulatory framework.

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