Hong Kong’s Securities and Futures Commission (SFC) issued a stark warning against Bybit, a leading cryptocurrency exchange, on March 14. The alert places Bybit on the SFC’s radar for offering unlicensed trading services in various crypto-related products. This move is part of Hong Kong’s broader efforts to regulate the bustling crypto market, ensuring investor protection and financial stability.
Bybit, known for its array of products including futures, options, leveraged tokens, and more, is now under scrutiny for making these offerings available to Hong Kong investors without the necessary regulatory approval. The SFC’s announcement highlights the absence of a license or registration for Bybit within Hong Kong, signaling a serious compliance shortfall.
The crux of the matter lies in the classification of crypto-related products as potential futures contracts or securities. Such classifications necessitate prior licensing from the SFC, a step Bybit seemingly bypassed. The warning specifically mentions bybit.com and its Seychelles-registered owner, Bybit Fintech Limited, drawing a distinction from bybit.com.hk, which does not currently offer crypto services in Hong Kong.
This regulatory spotlight follows Bybit’s February move to secure a virtual asset trading operator (VATP) license in Hong Kong through Spark Fintech Limited, a subsidiary effort hinting at its aspirations to operate within legal confines. However, with only two crypto exchanges holding the SFC’s license in Hong Kong, the path to compliance is narrow and challenging.
The deadline for exchanges to apply for a VATP license lapsed on February 29, with a cut-off for unlicensed operations set for May 31. Those failing to secure approval must exit the Hong Kong market within three months, underscoring the SFC’s firm stance on unlicensed crypto trading activities. This regulatory action serves as a cautionary tale for the crypto industry, emphasizing the importance of adherence to legal and regulatory frameworks in Hong Kong’s dynamic financial landscape.