The Hong Kong Securities and Futures Commission (SFC) issued a notice on Tuesday reminding the public that the grace period for virtual asset trading platforms (VATPs) in Hong Kong under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) will end on June 1.

The SFC clarified that all crypto trading platforms in Hong Kong must either be licensed by the SFC or be "deemed-to-be-licensed VATP applicants," warning that operating a VATP without proper licensing is a criminal offense. The SFC will take necessary actions against any violations.

The regulator noted that deemed-to-be-licensed VATP applicants, although not formally licensed, are improving their compliance measures. These applicants must demonstrate the effectiveness of these measures to the SFC’s satisfaction. Until formally licensed, they must comply with all SFC regulations, cannot market their services or onboard new clients, and must restrict their services from Mainland Chinese residents.

The SFC will conduct on-site inspections to ensure compliance, focusing on client asset protection and know-your-client processes. Any non-compliance will lead to license application rejections and further regulatory actions.

The SFC advised investors to trade only on VATPs it has licensed, urging them to check the "List of licensed virtual asset trading platforms" on the SFC’s website.

Several crypto exchanges, including Okx and Gate.hk, have announced they will cease operations in Hong Kong due to the new regulatory framework.