The Hong Kong Securities and Futures Commission (SFC) has received 18 crypto license applications in over two months from both local and global players.

On Feb. 20, Huobi HK, the Hong Kong arm of crypto exchange Huobi, applied for a virtual asset trading platform license with Hong Kong SFC, a local report confirmed. In total, 18 crypto exchanges, including Crypto.com, OKX, Bybit and DFX Labs, filed for the same license application starting mid-November 2023.

Hong Kong sees surge in crypto license applications image 0 List of crypto entities that applied for an operational license with Hong Kong SFC. Source: jinse.cn

As part of licensing requirements, applicants must pass stringent due diligence checks, such as a traditional financial audit that is broader in scope than proof-of-reserves (PoR). As a result, Web3 firms are having to spend as much as $25 million to build their applications for such licenses.

Hong Kong’s recent clarity on exchange licensing has also attracted traditional brokerages, such as Chinese stockbrokerage Tiger Brokers. In January, the brokerage upgraded its Type 1 SFC license to include crypto trading for professional investors and financial institutions based in Hong Kong. 

Speaking to Cointelegraph at the time, John Fei Zeng, chief financial officer and director of Tiger Brokers, said:

“Other than stocks and options, crypto is becoming an important asset class. It's hence a natural extension of business as a broker-dealer to add a new asset class, and the underlying Web3 technology is also integrated with Tiger's fintech background.”

The Hong Kong regulator also received its first application for a spot Bitcoin ( BTC ) exchange-traded fund (ETF) on Jan. 26 from Harvest Hong Kong, one of China’s largest fund managers.

Related: Hong Kong SFC issues warning over imposter crypto exchange posing as MEXC

While Hong Kong braces for crypto adoption, it has set a minimum insurance requirement of 50% for licensed crypto exchanges handling customers’ assets. 

As previously  disclosed by OSL Exchange, the 50% insurance coverage minimum applies to all assets under custody. At the same time, OSL announced that it had signed a two-year partnership with Canopius, a syndicate of underwriter Lloyds of London, for an insurance policy covering 95% of its users’ assets.

Magazine: ‘Crypto is inevitable’ so we went ‘all in’: Meet Vance Spencer, permabull