Hong Kong Crypto License Journey

Police & Regulations
Martin Walker
Sep 4, 2023 at 11:24 am

The OKX cryptocurrency exchange is currently in the advanced phases of pursuing a coveted virtual asset service provider (VASP) license within the vibrant financial landscape of Hong Kong. With eager anticipation, they foresee the final green light for their VASP application arriving by the ides of March in the ensuing year.

In a candid conversation, Li Zhikai, the esteemed global chief commercial officer of OKX, divulged that they are actively engrossed in substantive dialogues with esteemed banking institutions. They are now in a patient posture, awaiting the issuance of the coveted license that would allow them to embark on their commercial endeavors. Meanwhile, the cryptocurrency exchange has already set the wheels in motion for preliminary groundwork, particularly with regard to the intricate process of seamless technological integration.

In the backdrop of the year 2023, Hong Kong unfurled its banner as a pro-crypto nation, unveiling a meticulously crafted licensing framework that graciously extends its hand to crypto exchanges, inviting them to proffer their services to discerning retail customers. As this alluring opportunity beckoned, over 80 cryptocurrency firms initially threw their hats into the ring, expressing their fervent interest in establishing a foothold in the region. However, in the end, only a select coterie of crypto platforms, namely HashKey and OSL, managed to secure the coveted licenses that would enable them to commence their retail crypto trading endeavors.

HashKey, leading the vanguard, successfully commenced the offering of retail crypto trading services to the eager denizens of Hong Kong on the auspicious date of August 28. The regulatory body overseeing these affairs in the region judiciously opened the gateway to retail trading but limited the offerings to the venerable Bitcoin (BTC) and Ethereum (ETH) in order to prudently curtail the attendant risks associated with fledgling crypto tokens. Furthermore, the regulatory framework thoughtfully imposed a cap of 30% on investments, wisely mandating that investors allocate only a modest one-third of their net income to these ventures.

In addition to the front-runners, HashKey and OSL, it is noteworthy that Huobi and Gate.Io have also submitted their applications for the coveted opportunity to provide retail crypto trading services. Currently, they too stand on the precipice of approval, awaiting the nod of regulatory authorities. A representative from Gate.Io has previously regaled us with insights into the regulatory landscape in Hong Kong, underscoring that the Hong Kong Securities Futures Commission (SFC) maintains an unwavering commitment to exacting standards for virtual asset service providers. These exacting standards encompass the obligatory provision of insurance and compensation arrangements, which serve as a protective bulwark for the discerning clientele. In addition, the regulator has decreed that crypto exchanges must prudently store a substantial 98% of their assets in the secure confines of cold wallet storage, further exemplifying their commitment to robust safeguards.

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