A new era for Hong Kong’s virtual asset market: the rise of licensed exchanges

In the field of virtual asset trading in Hong Kong, licensed exchanges represented by OSL have become the core pillar of the market. With the end of the transition period of the licensing system for virtual asset trading platforms in Hong Kong on June 1, there are only two compliant licensed digital asset trading platforms left, one of which is OSL. This marks that the virtual asset market in Hong Kong has entered a new stage of development.

Active participation of traditional financial institutions

In the past two months, traditional local brokerage firms in Hong Kong have been involved in the field of virtual asset trading. At the same time, more and more investors, financial institutions, listed companies and family offices have begun to seriously consider allocating virtual assets through Hong Kong's compliant channels. Behind this trend, whether it is brokerage firms that have or are about to open virtual asset trading services, or financial institutions, listed companies and family offices that are accelerating their layout, to achieve the "last mile" of business, they cannot do without the trading, custody and security services provided by licensed exchanges.

Advantages of the “broker + exchange” model

At present, Hong Kong retail brokerages mainly adopt a two-tier operating model of "brokerage + exchange" to provide virtual asset trading services. Specifically, brokerages first open an omnibus account at a licensed exchange, and then execute virtual asset transactions for customers in the account according to their instructions.

OSL Group CFO Hu Zhenbang believes that the "broker + exchange" two-tier operating model formed under the current Hong Kong virtual asset regulatory system is not only at the forefront of the world in terms of virtual asset compliance transactions, but also opens up a feasible path for the "large-scale adoption" of virtual assets in traditional finance. This is mainly reflected in the following two aspects:

First, securities firms can leverage their large customer base and mature service system accumulated in the traditional financial field to directly reach tens of millions of existing investors and effectively promote the emerging investment field of virtual assets.

Second, licensed exchanges such as OSL are responsible for key back-end links such as virtual asset custody, transaction matching and settlement, and provide protection for investors' asset security through security measures and professional technical teams that meet regulatory requirements.

This "professionalism + security" division of labor and cooperation model fully leverages the advantages of securities companies in customer service and marketing promotion, while relying on the expertise of licensed institutions in compliance, technology and risk control to form complementary advantages and jointly build a safe and reliable virtual asset trading ecosystem.

The key role of licensed exchanges

With the development of the global virtual asset market, especially the change in the attitude of the US political circles and the approval of Bitcoin and Ethereum ETFs, listed companies, family offices and even traditional financial institutions such as banks and fund companies have begun to actively research and deploy virtual asset businesses. Under this trend, the importance of licensed exchanges has become increasingly prominent, becoming the "lifeline" of various businesses in the Hong Kong virtual asset market.

OSL Group CFO Hu Zhenbang revealed that since June 1, the business volume of Hong Kong's compliant licensed exchanges has increased significantly, including some listed companies and fund companies in the traditional financial field began to allocate virtual assets through licensed exchanges to meet compliance and audit requirements.

Whether it is incorporating the six virtual asset ETFs launched on April 30 into the investment portfolio, or directly trading and custodial virtual assets such as Bitcoin and Ethereum, it is inseparable from the support and operation of licensed exchanges represented by OSL.

Looking ahead

As the scale of Hong Kong's virtual asset ETFs continues to expand, more traditional brokerages provide virtual asset trading services, and financial institutions and family offices accelerate the pace of virtual asset allocation, licensed exchanges will continue to lead Hong Kong's virtual asset market into a new stage of greater maturity and prosperity, and make unique contributions to the development of the global virtual asset industry.

For licensed exchanges, this is just the beginning of a “historic moment.” The future is here, and a new era for Hong Kong’s virtual asset market is slowly unfolding.