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HomeLaw & PoliticsHong Kong's SFC Warns Against Unlicensed MEXC Crypto Exchange

Hong Kong’s SFC Warns Against Unlicensed MEXC Crypto Exchange

Hong Kong’s Securities and Futures Commission (SFC) has recently heightened its scrutiny of cryptocurrency exchanges operating within its jurisdiction. On March 15, the SFC issued a warning against MEXC, a global cryptocurrency exchange, for engaging with Hong Kong-based investors without the requisite licensing. This move underscores the regulatory body’s commitment to safeguarding investors from the risks associated with unregulated digital asset platforms.

MEXC, which is recognized as the 11th-largest cryptocurrency exchange worldwide by trading volume, with over $2.19 billion traded over a 24-hour period, has been actively promoting its services in Hong Kong. The exchange boasts an average of three million weekly visits and provides access to 1,942 cryptocurrencies, according to data from CoinMarketCap. Despite its significant market presence, MEXC has neither secured a license from the SFC nor applied for a virtual asset trading platforms (VATP) license, essential for legally operating within Hong Kong.

The SFC’s warning highlights the breach of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance by MEXC. The ordinance prohibits the operation of, or active marketing to Hong Kong investors of, a virtual asset service, including virtual asset exchanges, without appropriate licensing. This legal framework aims to prevent money laundering and terrorist financing risks associated with virtual asset transactions.

This development follows closely on the heels of the SFC’s addition of Bybit, another cryptocurrency exchange, to its warning list. Currently, the list encompasses 20 crypto exchanges, signaling a broader clampdown on unregulated digital asset trading platforms. The SFC’s actions serve as a cautionary note to investors about the potential risks of trading digital assets on unregulated exchanges, including the complete loss of investments if these platforms cease operations.

In a further effort to protect investors, the SFC has previously taken action against fake websites impersonating major local crypto exchanges. Notably, on March 4, the SFC warned against suspicious websites posing as OSL Digital Securities and Hash Blockchain Limited (HashKey), both licensed crypto trading platforms in Hong Kong. The regulator has also blacklisted domains impersonating MEXC, illustrating the ongoing challenges in curbing deceptive practices in the virtual asset space.

The deadline for crypto exchanges to file for a VATP application expired on February 29, with unlicensed firms required to halt operations by May 31. So far, only two exchanges, OSL and HashKey Exchange, have received SFC licenses, underscoring the stringent regulatory landscape in Hong Kong. As the SFC continues its efforts to regulate the virtual asset market, exchanges operating without approval are under increasing pressure to comply or exit the market.

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