Binance US guilty plea complicates Hong Kong affiliate’s crypto licence application

Binance, a leading cryptocurrency exchange, and its founder Changpeng Zhao faced a setback when they admitted to not following anti-money-laundering laws in the United States. This admission was part of a huge settlement that cost them billions of dollars. This situation could make it difficult for Binance to establish itself in Hong Kong, especially as they support a local company, HKVAEX, which is trying to get a license to operate there.

Binance has been going through a tough time, with lawsuits and regulatory issues in the US. They've had to cut down on their staff and pull out of some markets in Europe and Russia. Despite these challenges, Binance is trying to set up HKVAEX as a separate entity in Hong Kong to get a license under the new rules that allow exchanges to serve regular people who want to invest. But the connection to Binance might be a problem because Hong Kong's regulators have strict standards for companies and their leaders.

The guilty plea by Zhao and Binance in the US could be a major hurdle for HKVAEX's licensing efforts in Hong Kong. The city's Securities and Futures Commission (SFC) has stringent requirements for applicants and their significant stakeholders. If these individuals have a history of not following money-laundering laws or have been involved in financial crimes, it could influence the SFC's decision. Elizabeth Wong from the SFC mentioned that without knowing Binance's structure and market entry strategy, it's uncertain if they could be licensed in Hong Kong. The new CEO of Binance, Richard Teng, might bring his regulatory experience to the table, but as of now, Binance is not yet on the list of potential licensees.