Digital asset exchange Bybit has applied for a Virtual Asset Trading Operator (VATP) license in Hong Kong.

The exchange filed the application to Hong Kong’s Securities and Exchange Commission (SFC) through Spark Fintech Limited according to the regulator’s website.

The SFC official website shows that Bybit has applied for a Hong Kong virtual asset trading platform license on January 31, 2024. The trading platform is called Spark Fintech Limited. There are currently 14 companies on the applicant list. https://t.co/XZhHM7FgU3

— Wu Blockchain (@WuBlockchain) February 1, 2024

The application submitted on Jan 31 takes the number of firms seeking the license to 14.

Bybit Follows in OKX’s Footsteps

OKX also applied for a VATP license in November 2023 as Hong Kong is becoming an attractive spot for Web3 firms.

Lennix Lai, OKX’s Chief Commercial Officer expressed optimism at the move adding that the exchange looks to work with the city’s vision to become a global player and a leading web3 hub.

Currently, only two cryptocurrency companies have obtained the license, the first being OSL Exchange and the latter, HashKey Exchange in 2022.

Hong Kong regulators have two major licenses for digital asset firms seeking to operate in its jurisdiction.

While the VATP licenses sought by Bybit and OKX are to give companies access to retail clients, the Virtual Asset Service Provider License (VASP) covers larger institutional clients.

Although institutional clients usually invest based on the amounts and assets they control, the retail market also drives up reach and trading volumes. Consequently, this has been a huge source of revenue in recent times.

Last year, Hong Kong authorities launched operations to crack down on illegal blockchain companies offering retail services without a VATP license.

The Hong Kong Police Force set up a monitoring group to investigate and conduct risk assessments of related cases to protect investors with suggestions on tightening regulations after the infamous JPEX scandal.

Hong Kong’s Web3 Drive

Hong Kong is among the cities on the pathway towards becoming a Web3 hub for status. This is possible as the regulators rolled out a licensing regime with guidelines for several sectors.

The city’s approach to cryptocurrencies is opposed to mainland China’s anti-crypto stance which started a crackdown on assets, leading many analysts to suggest Hong Kong might be a test bed for a future reversal of policy in China.

Hong Kong’s regulators recently announced a decision to accept applications for spot cryptocurrency ETFs and released strict requirements for firms.

OSL Executive Director: Hong Kong Expected to Approve Spot Crypto ETFs by Mid 2024

Learn more

— Cryptonews.com (@cryptonews) January 22, 2024

The new rules released by the city have been hailed among industry executives calling on other regions to emulate Hong Kong and the European Markets in Crypto Assets (MiCA) regulation.

After the fall of Terra Network and the implosion of FTX in 2022, global authorities began a major shift towards regulations leading to bottle-neck policies in some jurisdictions and multiple lawsuits against Web3 firms.

As a result, a key element for web3 companies became jurisdictions with clearer rules over regions without rules.

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