Digital Asset Exchange Bybit Applies for Virtual Asset Trading Operator License in Hong Kong

Bybit, a digital asset exchange, has submitted an application for a Virtual Asset Trading Operator (VATP) license in Hong Kong.

Bybit, a digital asset exchange, has applied for the Hong Kong Virtual Asset Trading Platform (VATP) license.

Digital asset exchange Bybit has recently applied for a Virtual Asset Trading Operator (VATP) license in Hong Kong. The exchange submitted its application to Hong Kong’s Securities and Exchange Commission (SFC) through Spark Fintech Limited. This move comes as Hong Kong proves to be an attractive destination for Web3 firms.

The application, filed on January 31, brings the total number of companies seeking the VATP license to 14. Bybit’s decision to follow in the footsteps of OKX, which applied for the license in November 2023, showcases the growing interest in Hong Kong as a global player and a leading Web3 hub.

Currently, only two cryptocurrency companies have obtained the license; OSL Exchange and HashKey Exchange in 2022. Hong Kong regulators offer two major licenses for digital asset firms operating in the jurisdiction. The VATP license, sought by Bybit and OKX, provides companies access to retail clients, while the Virtual Asset Service Provider License (VASP) covers larger institutional clients.

While institutional clients often invest based on the amounts and assets they control, the retail market plays a significant role in driving reach and trading volumes, leading to substantial revenue generation. As a result, Hong Kong authorities have intensified efforts to crack down on illegal blockchain companies offering retail services without a VATP license. The Hong Kong Police Force has established a monitoring group to investigate and conduct risk assessments, ensuring the protection of investors.

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Q&A Content

Q: What is a VATP license and why is it important for digital asset companies?

A: A VATP license, or Virtual Asset Trading Operator License, is a license that digital asset firms must obtain to operate in Hong Kong. It grants them the ability to provide services to retail clients. This license is essential as it ensures that companies comply with regulations, protects investors, and allows for the growth and legitimacy of the digital asset industry.

Q: How does obtaining a VATP license benefit retail clients?

A: Obtaining a VATP license benefits retail clients by ensuring that the digital asset exchange they use operates under a regulated framework. This provides greater transparency, security, and legal protection for retail investors. It also helps to reduce the risk of fraudulent activities and promotes a healthier and more stable market environment.

Q: Are there any risks associated with using digital asset exchanges without a VATP license?

A: Yes, there are risks associated with using digital asset exchanges without a VATP license. These exchanges may not have proper regulatory oversight and can potentially engage in fraudulent or manipulative activities. Retail investors may not have legal recourse or protection in case of disputes or losses. It is always recommended to use licensed and regulated exchanges to safeguard your investments.

Hong Kong’s Web3 Drive

Hong Kong is positioning itself as a Web3 hub, making significant strides towards becoming a global player in this space. The city has implemented a licensing regime with guidelines for various sectors, emphasizing cryptocurrencies’ importance. This approach sets it apart from mainland China’s anti-crypto stance and raises the possibility that Hong Kong might serve as a test bed for future policy reversals in China.

Recently, Hong Kong regulators announced that they would accept applications for spot cryptocurrency exchange-traded funds (ETFs) and released strict requirements for firms. This move has received positive feedback from industry executives, who urge other regions to emulate Hong Kong’s regulatory framework. The city’s new rules are also aligned with the European Markets in Crypto Assets (MiCA) regulation, further solidifying Hong Kong’s position in the global crypto landscape.

After the fall of Terra Network and the FTX implosion in 2022, global authorities have shifted their focus towards regulations, leading to bottlenecks in some jurisdictions and multiple lawsuits against Web3 firms. Web3 companies now seek jurisdictions with clearer rules to operate in. Hong Kong’s commitment to establishing comprehensive regulations makes it an attractive destination for these companies.

Future Outlook and Investment Recommendations

Based on current trends and the growing interest in Hong Kong as a Web3 hub, it is expected that more digital asset firms will apply for the VATP license in the coming months. As regulatory frameworks become more established and comprehensive, Hong Kong is likely to attract a significant share of the global Web3 market.

For investors, considering digital asset firms operating in jurisdictions with clear regulations, like Hong Kong, can offer both stability and potential growth opportunities. However, it is crucial to conduct thorough research and due diligence before making any investment decisions. Staying informed about the latest regulatory developments and industry news is also essential to navigate the rapidly evolving digital asset landscape.

References

1. David Pokima: Ripple’s David Schwartz talks bottom-up growth of XRP ledger, rebuts critics (Q&A)
2. US SEC delays decision on Grayscale’s spot ETH ETF application
3. Digital asset exchange OKX obtains retail license in Dubai
4. X-reacts: Taylor Swift AI scandal blocking related searches
5. Gate.io’s proof-of-reserves report reveals $43B assets, 115% reserve ratio of 171 assets
6. Hong Kong Web3 drive – News on Google
7. FTX commits to full customer repayment, scraps exchange restart – here’s the latest
8. ESMA seeks feedback on reversal solicitation and crypto classification under MiCA

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