An inventory of the latest status of Hong Kong’s first batch of licensed virtual asset exchanges

Starting from June 1, 2023, the SFC will begin accepting applications for virtual asset exchange licenses. Despite the strict mandatory licensing system - all virtual asset trading platforms operating virtual asset exchange businesses (virtual asset services) in Hong Kong or actively promoting their services to Hong Kong investors will be required to obtain a license from the Securities and Futures Commission (SFC); Hong Kong's huge geographical advantage backed by the mainland and the Chinese market has still won the favor of a number of crypto workers.

According to the South China Morning Post on September 25, in addition to the two licensed cryptocurrency trading platforms (OSL Digital Securities Limited and Hash Blockchain Limited), the regulator said that four companies have now submitted license applications, namely HKVAX, HKBitEx, HongKongBGE Limited and Victory Securities.

OSL becomes the first licensed virtual asset exchange in Hong Kong

On August 3, 2023, BC Technology Group announced that its wholly-owned subsidiary OSL Digital Securities Limited has obtained approval from the Hong Kong Securities and Futures Commission to upgrade its existing license to retail trading. It is worth mentioning that as early as the end of 2020, OSL had obtained licenses No. 1 and No. 7. OSL became the first digital asset trading platform in Hong Kong with a listed parent company, licensed in Hong Kong, assets covered by insurance, and audited by the Big Four accounting firms .

BC Technology Group, formerly ANX, was founded in 2013. The group has now become one of the world's oldest and most experienced digital asset companies, providing reliable, secure and efficient services to large institutional investors around the world.

For a long time, OSL, as the only licensed and listed digital asset trading platform in Hong Kong, has taken advantage of compliance . It has successively carried out business cooperation with traditional financial giants such as DBS Bank and Standard Chartered Bank in the field of digital assets, and received a HK$543 million investment from Singapore's sovereign fund GIC. With the advancement and implementation of Hong Kong's Web3 policy, OSL has gradually carried out retail investor business and developed steadily.

OSL expects to build a concentrated and high-conviction portfolio to invest in unique growth opportunities in the industry to provide investors with strong positive risk-adjusted returns in the medium to long term. In the future, it will focus on private equity and venture capital, investing in blockchain/web3 and other related industries.

Hashkey Exchange receives approval from the Hong Kong Securities and Futures Commission to upgrade its existing license to provide crypto trading services to retail investors

In 2022, Hashkey announced that it had been granted a Type 1 (Securities Trading) license and a Type 7 (Providing Automated Trading Services) license by the Securities and Futures Commission (SFC) of Hong Kong. On August 3, 2023, Hashkey announced that it had been approved by the SFC to upgrade its existing license, and that it could now officially provide retail investors with trading services for mainstream cryptocurrencies such as Bitcoin and Ethereum . The exchange was officially launched on August 28.

Haskey provides deposits and withdrawals in USD and HKD. Globally recognized institutional accounts can be directly transferred to the HashKey Exchange fiat currency wallet, and USD and virtual asset trading pairs are also available. Customer funds are stored independently, effectively separated from HashKey Exchange operations, and protected by institutional custody-level insurance. Currently, Hashkey has obtained ISO 27001 (information security) and ISO 27701 (data privacy) system certifications, and is attracting investors to register and participate in the form of HSK airdrops.

HKVAX and Magic Circle cooperate to promote STO issuance and trading

On August 11, 2023, the Hong Kong Virtual Asset Exchange (HKVAX) received an in-principle approval notice from the Securities and Futures Commission (SFC) of Hong Kong, allowing it to carry out Type 1 and Type 7 regulated activities, and will become the third licensed virtual asset trading platform in Hong Kong.

HKVAX was founded by Hong Kong entrepreneurs with the goal of establishing new standards for digital asset transactions and creating a bridge between traditional finance and digital finance for local and global markets. As early as April 20, 2021, Magic Circle, a digital securities STO solution provider, announced that it had officially established a strategic partnership with HKVAX to jointly promote the issuance and trading of digital securities STO in Hong Kong and the Asian market through closer business cooperation.

In the future, HKVAX will provide three core products, including: over-the-counter (OTC) brokerage services, which combine narrow spreads and high liquidity to allow users to easily trade between fiat currencies and virtual assets; institutional-grade trading platforms; and 100% guaranteed custody services, with clear asset access rights and controls, and clear separation between client assets and the company's own assets.

Many former senior executives of the Hong Kong Stock Exchange have collectively "gone into business"
Established the Hong Kong Digital Asset Exchange (HKbitEX)

Backed by Taiji Capital, HKbitEX was established on June 8, 2020. Many former executives of the Hong Kong Stock Exchange joined the company and it is one of the first institutions to apply for the "Virtual Asset Trading Platform License" of the Hong Kong Securities Regulatory Commission. The company is headquartered in Hong Kong and mainly provides spot and over-the-counter trading of electronic assets for professional investors, focusing on the virtual asset exchange business. In April 2020, it obtained the Trust and Company Service Provider License (TCSP LICENSE).

Similar to the situation of HKVAX, on February 1, 2023, Magic Circle and Hong Kong Digital Asset Exchange ("HKbitEX") officially announced a partnership to expand the adoption of security token offerings ("STOs") in Hong Kong.

The son of the "King of High Seas Gambling" has entered the virtual asset trading field and founded BGE

HK BGE is a wholly-owned subsidiary of the listed company HKE Holdings (01726). HK BGE once hired Thor Chan as its CEO, who is the former CEO and co-founder of the defunct crypto exchange AAX. HK BGE's parent company HKE Holdings has a market value of approximately HK$2.3 billion. The company's chairman and major shareholder is Lian Haomin. It is speculated that he is the son of Lian Zhuozhao, who is known as the "King of High Seas Gambling", but this has not been confirmed.

HK BGE currently has only two directors, including Ou Jinpei and Ji Danna, who are the company's operations director and business development director respectively. The company's website is currently only open to invited professional investors.

Victory Securities launches virtual asset asset management and virtual asset trading services

Shengli Securities has been active in virtual asset investments in recent years and holds the Securities Regulatory Commission's No. 1 (virtual asset trading), No. 4 (virtual asset consulting services) and No. 9 (virtual asset asset management services) licenses.

As the first financial group to be issued both virtual asset trading and consulting licenses by the SFC , Victory Securities began to provide virtual asset trading services in March 2023. On September 25, Hong Kong SFC CEO Leung Fung-yee announced that a new list of virtual asset trading platforms in the pipeline will be added for investors to pay attention to whether the platforms have made false statements. Victory Technology VDX (Victory Securities) is among them.

Currently, virtual asset investments (except virtual asset ETFs) provided by Victory Securities are only available to professional investors. Users need to complete the professional investor assessment form and provide asset proof of personal assets of no less than HK$8 million in the past year (such as bank statements, securities statements, trust certificates, etc.) before they can start virtual asset trading.

OKX is ready to enter the market next year

In 2022, OKX has started to apply for a virtual asset exchange license in Hong Kong. In June this year, OKX revealed that the group has entered the final stage of applying for a VASP license and is expected to obtain the license between March and June next year. On September 25, 2023, OKX Chinese tweeted (X) that OKX HK plans to formally submit an application for a Hong Kong VASP license by the end of October, steadily advancing its layout in the Hong Kong market.

Under the background of the deep bear market, OKX has adhered to the concept of in-depth product polishing and steady development of ecological construction. Under the joint action of multiple factors, it has still achieved good market growth and has occupied most of the crypto market in the Chinese-speaking region. With the continuous implementation of relevant policies of the Hong Kong government, it is worth looking forward to whether OKX will have more institutional in-depth cooperation and retail investor-friendly financial product ecological promotion in Hong Kong.

Sun Ge: HTX will obtain Hong Kong license by the end of this year at the earliest

On May 26, 2023, the cryptocurrency exchange Huobi (now renamed HTX) announced the official launch of Huobi HK, embracing Hong Kong's new cryptocurrency policy. In the future, Hong Kong users will be able to trade mainstream cryptocurrencies such as BTC, ETH, TRX, HT... through HuobiHK.

On June 3, Justin Sun, the founder of Tron and current global advisor of HTX, revealed in an interview with CoinDesk that Hong Kong has submitted a VASP license application, which includes an 18-month "grace period" during which the Hong Kong Securities Regulatory Commission can approve or reject the application. Although Sun is full of confidence, according to people familiar with the matter, HTX has been blacklisted by the Hong Kong Securities Regulatory Commission, and the licensed virtual asset exchange may just be another traffic trap for Sun.

Since the implementation of the new policy in Hong Kong, the application for virtual asset exchange licenses has become an industry indicator for the advancement of Web3 in Hong Kong. We will wait and see whether more exchanges will join and try to share this pie in the future.