Hong Kong Licenses First Virtual Asset Trading Platform

However, Hong Kong’s SFC did not name the licensed company.

Close supervision

The SFC announced that the platform license allowed the platform to service professional investors. The license does come with a set of restrictions. First, it will serve its clients under the close supervision of the SFC. Furthermore, the regulator will engage in “tailor-made requirements”. These restrictions look like those the SFC keeps for securities brokers as well as automated trading venues.

The license gives the recipient permission to engage in two kinds of activities. The first, Type 1 activities, allows the company to deal in securities. The second, Type 7, grants the right to engage in automated trading service activities.

The professional investor clause in the restrictions is part of a change of heart by the regulator. As BeInCrypto reported previously,  Hong Kong’ crypto scene was until recently oriented largely on the consumer market. The Hong Kong authority is beginning to tighten access to crypto for investors with less than $HDK 8 million (~USD 1 million).

Even more supervision

The SFC also mentioned specifically that it is broadening its coverage regarding regulation. In November, the Hong Kong government proposed that the SFC regulate all centralized virtual asset exchanges. This expands the SFC’s capabilities. Currently, platforms for trading between cryptocurrencies fall outside the agency’s reach.

BeInCrypto reported on the proposal on Nov. 3. Currently, market operators can exploit a loophole in the definition of ‘security’ to evade SFC scrutiny. The Hong Kong authority’s changes will not affect the security tokens market, however.

Digital Yuan connection?

When the Hong Kong authority announced the proposed regulatory changes, speculation ramped up quickly. As such, some commentators saw the move as ending the flow of money from mainland China. Others saw it as a way to prepare the ground for the introduction of the digital yuan. In this case, consumer enthusiasts would be pushed toward the digital yuan by removing competition.

Hong Kong’s winner revealed

Separately, OSL Digital Securities announced that it received the SFC license. OSL notes that with the license, it becomes, “the world’s first SFC-licensed, digital asset wallet-insured, Big-4 audited digital asset trading platform for institutions and professional investors.”

The exchange will enable professional investors the ability to trade in Bitcoin, Ethereum, as well as other “high-quality” coins and some security token offerings (STOs).