The Hong Kong Securities and Futures Commission (SFC) has said it will “conduct on-site inspections” of local virtual asset trading platforms (VATPs) that are still going through their regulatory applications after a June 1 licensing deadline.

The SFC reminded crypto companies on May 28 about their requirement to get licensed before June. After the deadline, all local crypto trading platforms must either be licensed or “deemed-to-be-licensed” by the SFC.

Deemed-to-be-licensed applicants will fall under a short-term framework designed for crypto firms that were already operating in the region before the licensing regime was enacted.

After June 1, operating an unlicensed VATP in Hong Kong would be a criminal offense and the SFC would be chasing companies up, seemingly in person.

“In the coming months, whilst the deemed-to-be-licensed VATP applicants pursue their applications, the SFC will conduct on-site inspections to ascertain their compliance with the SFC’s regulatory requirements,” the SFC said.

It added it would have “a particular focus” on how the firms are safeguarding client assets and undertaking Know Your Customer (KYC) processes.

The SFC urged investors only to trade crypto on SFC-licensed platforms.

It warned companies seeking licenses not to “actively market services or onboard new retail clients until formally licensed” and to prevent mainland Chinese residents from accessing their services.

Related: Hong Kong crypto exchange folds to regulatory pressure

Earlier this month, the number of crypto exchanges seeking operational licenses in Hong Kong steadily decreased.

A total of 11 crypto companies and exchanges, including OKX and Huobi’s local arm, withdrew their applications ahead of the deadline, with 18 applications still pending approval.

Crypto exchange Gate.HK ceased all activities related to acquiring new users and marketing, prevented existing users from making deposits, and began delisting tokens on May 23.

It plans to relaunch services after reconstructing its platform to comply with Hong Kong’s regulatory requirements.

Only two companies, OSL Digital Securities Limited and Hash Blockchain Limited, have been granted a license to operate in Hong Kong, according to the SFC.

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