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Hong Kong approves first retail cryptocurrency exchanges

3 mins read

HONG KONG – Local crypto giants, HashKey Group and OSL, have been greenlit by Hong Kong regulators to operate as the city’s inaugural licensed cryptocurrency exchanges catering to retail investors. The move reaffirms the city’s positioning as a burgeoning global crypto nucleus.

These two were, hitherto, the sole local exchanges licensed by the Securities Futures Commission (SFC) to provide specific digital asset trading services, but only to professional investors. In a significant upgrade, both were authorized this Thursday to extend their services to the general public.

Gary Tiu, Head of Regulatory Affairs at OSL, heralded the move as a landmark moment. “This demonstrates that digital asset markets can be both regulated and safe,” he proclaimed. In tandem, OSL announced that retail investors could instantly register on its platform, initiating with trading facilities for high-demand cryptocurrencies such as bitcoin and ethereum. Concurrently, OSL unveiled plans for an app tailored to retail investors.

HashKey Group is also pacing ahead. Livio Weng, the COO, divulged plans for the soon-to-be-launched HashKey Exchange mobile application catering to retail users, with an initial offering of bitcoin and ether trades. In a rebranding move, the firm will transition from HashKey Group to HashKey Exchange. Ambitiously, they are targeting a whopping one million retail sign-ups by the year’s end.

However, it’s pertinent to note that this license upgrade isn’t directly tethered to Hong Kong’s new virtual asset service provider (VASP) licensing system, launched earlier in June. While no exchange has yet been licensed under this novel regime, they’ve been provided a grace year either to adhere to the revamped SFC stipulations or make a market exit.

Leading exchanges OKX and Huobi, with origins in mainland China, are also in the race, with both already commencing the retail user registration process in Hong Kong. Lennix Lai, OKX’s Global Chief Commercial Officer, conveyed his optimism about their licensing application, indicating a steadfast commitment to the Hong Kong market.

Alex Wong, an advisory MD at FTI Capital Advisors, shed light on some exchanges that the SFC has expedited and received in-principle nods. However, official announcements might still be some months away.

Post the tumultuous 2022 marked by notable exchange collapses, Hong Kong’s latest licensing strategy aims at not just luring more crypto businesses but also enhancing risk oversight. The stringent regime mandates exchanges to adhere to an extensive array of criteria including user onboarding protocols, cybersecurity, and corporate governance.

Furthermore, as part of its latest expansion, HashKey has augmented its team with over ten seasoned professionals. An enticing partnership with Standard Chartered Bank has also been announced, aiming to simplify fiat currency transactions for users. This partnership stands out as crypto firms in the past have faced challenges partnering with city banks due to licensing issues.

The developments indicate a promising trajectory for Hong Kong’s crypto market, signaling robust growth, enhanced regulation, and increased investor confidence.

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