Bybit: Hong Kong Regulator Issues Warning Against Exchange

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1. Regulators Warn of 11 Bybit Products

2. Implications for Unlicensed Exchanges

The Securities & Futures Commission (SFC) of Hong Kong has officially added the cryptocurrency exchange Bybit to its warning list. This signals a significant move against unlicensed virtual asset trading platforms (VATPs) in the region. The SFC’s announcement today highlighted concerns over Bybit offering trading services in crypto-related products across several jurisdictions without the necessary licensing.

Regulators Warn of 11 Bybit Products

The warning encompasses a list of 11 products provided by the exchange. This includes futures, options, leveraged tokens, and wealth management services. The regulator’s primary concern is the availability of these products to investors in Hong Kong. It emphasized that no entity within the Bybit group holds a license to conduct regulated activities within the territory.

This action by the SFC underscores the stringent regulatory framework in Hong Kong regarding cryptocurrency-related products. Such products, often classified as futures contracts or securities, require a license from the SFC prior to being offered to residents of Hong Kong. The Mar. 14 warning specifically targets Bybit.com and its Seychelles-registered parent company, Bybit Fintech Limited.

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Interestingly, Bybit’s Spark Fintech Limited subsidiary had been seeking a VATP license in Hong Kong. This move is part of the broader push within the cryptocurrency exchange industry in the region to comply with local regulations. To date, only two exchanges have secured a license from the SFC: OSL Exchange on Dec. 15, 2020, and HashKey Exchange on Nov. 9, 2022.

Implications for Unlicensed Exchanges

The recent warning comes after the Feb. 29 deadline for crypto exchanges to apply for a VATP license, signaling a tightening of oversight by Hong Kong authorities. Unlicensed exchanges are required to halt their operations in the Special Administrative Region by May 31. Additionally, firms whose VATP applications are rejected by the SFC are mandated to cease operations and exit the city within three months.

This development reflects Hong Kong’s commitment to regulating the virtual asset market and protecting investors from the risks associated with unlicensed trading platforms. The inclusion of the exchange on the SFC’s warning list serves as a reminder of the regulatory hurdles facing cryptocurrency exchanges in jurisdictions across the globe.