Hong Kong Securities and Futures Commission discloses regulatory list, which crypto company is most risky?

Original | Odaily Planet Daily
Author | Qin Xiaofeng
As the scale of the case involving the crypto platform JPEX expands, the Hong Kong Securities and Futures Commission has begun to disclose more information about the Virtual Asset Trading Platform (VATP) in order to raise public awareness of anti-fraud and enhance information transparency.
On September 29, the Hong Kong Securities and Futures Commission published several lists of virtual asset trading platforms on its website (click to jump): a list of licensed virtual asset trading platforms, a list of applicants for virtual asset trading platforms, a list of closed virtual asset trading platforms, a list of virtual asset trading platforms deemed to have been licensed, and a special list for suspicious virtual asset trading platforms. Odaily Planet Daily also analyzed the more detailed information behind these lists for readers as soon as possible.
The first is the "List of Licensed Virtual Asset Trading Platforms", of which there are currently only two: OSL Digital Securities Limited (Platform: OSL Exchange) and Hash Blockchain Limited (Platform: HashKey Exchange).
It should be noted that the current licensing system for virtual asset trading platform operators in Hong Kong is a "dual license" system; in addition to the "Securities Tokens" licensing system applicable to the Securities and Futures Ordinance (SFO), there is another licensing system for "Non-Securities Tokens" applicable to the Anti-Money Laundering Ordinance (AMLO). Both OSL Exchange and HashKey Exchange have obtained the first license, which was approved on December 15, 2020 and November 9, 2022, respectively. There is no record of the second license.
However, this does not prevent them from providing crypto trading services to the market. For example, OSL has been approved by the Hong Kong Securities and Futures Commission to upgrade its existing license in August this year, and can officially provide retail investors with trading services for mainstream currencies such as Bitcoin and Ethereum; HashKey Exchange also opens BTC/HKD and ETH/HKD trading pairs to retail investors, but other altcoins (such as Avalanche) can only be opened to professional investors.
The second is the "List of Virtual Asset Trading Platform Applicants", of which there are currently four, namely: Hong Kong BGE Limited (platform: BGX), Hong Kong Digital Asset EX Limited (platform: HKbitEX), Hong Kong Virtual Asset Exchange Limited (platform: HKVAX) and Victory Fintech Company Limited (platform: VDX).
The SFC stated that all entities on the applicant list have not been licensed by the SFC and may not comply with the SFC's requirements; applications that fail to meet the standards will be returned by the SFC, and the names of the relevant virtual asset trading platform applicants will be removed from the virtual asset trading platform applicant list and added to the list of removed applicants; the main purpose of publishing the list is to facilitate the public to judge whether the virtual asset trading platform has made false statements about its license application (for example, claiming that a license application has been submitted, but in fact it has not been submitted).
According to Hong Kong media, dozens of crypto platforms or listed companies and securities companies have announced that they are applying for, planning to apply for or have applied for Hong Kong crypto licenses. They are: Binance, OKX, ByBit, HTX Exchange, BingX, Bitget, Gate.io, Gate.hk, Guofu Innovation (00290), Xinque Technology (01063), American Lion Group Holdings LGHL, Greenland Jinchuang, a subsidiary of Greenland Holdings Group, and Bullish under Block.one.
The background of the four companies currently applying for licenses is as follows:
(1) HKBGE. HKBGE is a wholly-owned subsidiary of HKE Holdings (01726), a Hong Kong-listed company. It submitted applications for licenses No. 1 and No. 7 last year. HKBGE’s former CEO, Thor Chan, was the co-founder and former CEO of the now defunct exchange AAX. In December last year, HKE Holdings announced that Thor Chan had resigned as a director and CEO of HKBGE, and that the group’s member companies (including HKBGE) had no business relationship with AAX. Subsequently, HKBGE appointed Ouyang Jiannan, the former chief operating officer of HashKey Exchange, as CEO. Currently, HKBGE is only open to invited professional investors.
(2) HKbitEX. HKbitEX is affiliated with Taiji Capital Group and has always regarded itself as "one of the first institutions to apply for VATP". Its founder Gao Han used to work for the Hong Kong Stock Exchange (00388) and participated in the Hong Kong Stock Connect and Bond Connect. After Gao Han founded HKbitEX, he recruited many former colleagues from the Hong Kong Stock Exchange to join. Chief Development Director Shi Lin was the former co-head of the Hong Kong Stock Exchange's Listing Review Group.
In September this year, Taiji Capital Group announced the launch of Hong Kong's first real estate fund security token offering (STO), and issued the token PRINCE by its subsidiary Pioneer Asset Management's closed-end fund for professional investors, aiming to raise about HK$100 million. If regulatory approval is obtained, the group plans to use the token for the listing of its virtual asset trading platform HKbitEX in the future.
(3) HKVAX. In August, HKVAX announced that it had obtained the SFC’s approval in principle and could carry out Type 1 and Type 7 regulated activities, becoming the third licensed virtual asset trading platform in Hong Kong. HKVAX co-founder and operations director Fok Siu-leung said that it would take at least half a year to obtain the SFC’s Type 1 and Type 7 licenses, and plans to launch platform, OTC over-the-counter trading and other services by then, but whether to launch STO (security tokens) will depend on the SFC’s regulations (Odaily Note: The content is all claimed by the platform itself and has not been confirmed by the SFC; Odaily Planet Daily searched the SFC’s official website and did not find the platform’s so-called approval in principle.).
HKVAX’s website shows that the company has three co-founders. CEO Wu Weiliang was formerly the managing director of CITIC Futures International Department and is currently the vice chairman of the Financial and Treasury Services Committee of the Hong Kong General Chamber of Commerce (HKGCC).
(4) VDX. VDX is an encrypted platform under Victory Securities (08145), a Hong Kong-listed company. The company's executive directors include Gao Juan, chairman of the Hong Kong Securities Association. In September this year, Victory Securities announced that its virtual asset trading app will be available on the Apple Store and Android system. It is worth noting that its virtual asset trading service is only for professional investors.
Victory Securities executive director Chen Peiquan said that the Hong Kong Securities Regulatory Commission is expected to announce guidelines on securities firms opening up retail trading of virtual assets in the near future. According to the expected progress, Victory Securities may open up retail virtual asset trading in the fourth quarter of 2023.
Victory Securities CEO Gao Juan said that the company is only connecting to the licensed virtual asset exchange OSL. Investors can buy and sell the exchange's cryptocurrencies through the company. The other party only provides BTC and ETH. The cryptocurrencies purchased by investors will be deposited in OSL and protected by insurance. The company is also ready to connect to other licensed exchanges.
In the list published by the SFC, there are also three blank items: the "List of applicants whose license applications have been returned, rejected or withdrawn"; the "List of closed virtual asset trading platforms" lists the names of virtual asset trading platform operators that must close within a specified period according to relevant laws and regulations; and the "List of virtual asset trading platforms deemed to be licensed" lists the names of virtual asset trading platform operators that are deemed to be licensed on June 1, 2024.
Finally, the Hong Kong Securities and Futures Commission also released a list of "suspicious virtual asset trading platforms", involving six platforms, the names and are:
JPEX: Falsely claimed to have obtained licenses from several overseas regulators to operate a virtual asset trading platform, provided falsely high returns for some products, restricted users from withdrawing assets, etc. Website: https://jp-ex.io/
FUBT Exchange, which has the same name as the now-defunct Fubit Exchange, claims to be a crypto trading platform and provides a fake Hong Kong phone number. It allegedly has a business location in Hong Kong, with the website www.fubthk.com
Futu: Using the same company logo to impersonate Futu Securities International (Hong Kong) Limited, a SFC-licensed institution, with the website https://futu-pro.com; https://futubit.com
EFSPD: Falsely claimed to have been approved by Hong Kong Exchanges and Clearing Limited to launch crypto tokens and that it was regulated by the Hong Kong Monetary Authority. The website is www.efspd.com
OSL Trading: Impersonating the licensed institution OSL, its website is www.hifly 59702.top
Arrano: Claims to be a one-stop platform for NFT and cryptocurrency products, the website is https://arrano.network
The CSRC stated that it will update the above list regularly. Investors should avoid buying and selling virtual assets on unregulated virtual asset trading platforms (including any applicants listed on the virtual asset trading platform applicant list) and guard against financial risks, otherwise it may be difficult to obtain compensation through legal channels.