On October 27, SINOHOPE, a subsidiary of SinoHope Technology Holdings Limited (hereinafter referred to as "SinoHope", stock code: 1611.HK), announced the official launch of the "Hong Kong VASP License Application Guardian Program", which aims to provide IT system-level infrastructure convenience for institutions and enterprises that intend to apply for Hong Kong Virtual Asset Service Provider (VASP) licenses. At the same time, based on its own business and compliance experience, it provides customers with consulting services on the process and business framework related to the establishment of Hong Kong Trust or Company Service Provider (TCSP) licenses, helping more institutions to carry out compliant virtual currency and Web3 businesses in Hong Kong to seize the opportunity in this emerging market.
In October 2022, the Hong Kong government issued a policy statement, indicating support for digital assets and promoting the development of the industry in all aspects. On June 1 this year, the digital asset trading platform license regulations issued by the Hong Kong Securities and Futures Commission came into effect, stipulating that trading platforms must apply for a license to operate in Hong Kong. For trading platforms that have been operating before June 1 this year, if the transitional arrangement applies, they must submit a license application to the Securities and Futures Commission within nine months, that is, before February 29, 2024, otherwise they must end their business in Hong Kong before May 31, 2024.
The establishment of a licensing system and the implementation of Hong Kong's supervision are a milestone for the crypto asset industry, which has been unable to wait for specialized regulatory rules in most regions. It is also regarded by the Web3 industry as "the most clear policy benefit in 2023". Since the release of the policy, in addition to existing licensed institutions such as HashKey and OSL, more than 100 companies, including emerging crypto asset trading platforms and traditional financial institutions such as HKVAX, VDX, HKBitEx, HKBGE, Tiger Securities and Futu Securities, are applying for VASP licenses in Hong Kong. New and old financial institutions are crowding into Hong Kong for the compliance operation of virtual asset trading platforms, showing the popularity of VASP licenses. It also marks the intersection of Web3 emerging finance and traditional finance in Hong Kong, and crypto assets are gradually becoming mainstream assets in the financial world.
Compared with the previous No. 1 and No. 7 license systems, the Hong Kong VASP license allows exchange services to be opened to retail investors in Hong Kong under certain conditions for the first time, which has become one of the reasons that attract many platform institutions to compete for this license. The Hong Kong Securities and Futures Commission has put forward detailed requirements for the financial soundness of license applicants. The document points out that platform operators should always have fully liquid assets in Hong Kong entities, and the amount should be equivalent to the platform's operating expenses for at least 12 months; platform operators must always maintain a paid-up share capital of not less than HK$5 million; platform operators must always maintain liquid funds of not less than the platform operator's prescribed liquid funds (generally HK$3 million). In addition, in order to implement investor protection, the Hong Kong Securities and Futures Commission has also made many compliance requirements for license applicants, the key points of which include:
l A permanent establishment is established in Hong Kong, or the head office is not in Hong Kong but is registered under the Companies Ordinance (Cap. 622);
l The applicant and its responsible officers, licensed representatives, directors and ultimate owners meet the fit and proper person test;
l Business operations fully comply with regulatory requirements and are supervised by the Securities and Futures Commission;
l Establish a TCSP subsidiary to independently manage users' trading assets and perform AML/CTF review duties.
The above compliance requirements are like a strict "exam paper" prepared for licensing, which is thrown to all those who want to become licensed virtual asset trading service providers in Hong Kong, testing the applicants' long-term preparation.
As the world's leading one-stop digital asset service platform, SINOHOPE has been committed to promoting the development of compliant digital asset professional services and technology to create inclusive value for society. SINOHOPE provides compliant and secure digital asset custody services. Its subsidiary, SINOHOPE Trust Co., Ltd., has obtained the TCSP license and can provide compliant and secure digital asset custody services to global customers.
The "Hong Kong VASP License Application Guardian Program" is a complete set of customized solutions tailored by SINOHOPE for Hong Kong VASP license applicants to meet regulatory requirements. It not only realizes the regular business management functions of the trading platform, such as user deposits and withdrawals, fund collection, business warnings and other positive processes and abnormal scenarios; it also fully takes into account the regulatory requirements for the custody of funds of trading platforms holding VASP licenses, and supports user privatization deployment to meet the requirements of private key custody in Hong Kong. At the same time, the KYT audit requirements are embedded in the charging and withdrawal process, providing cold wallet management tools, cross-system business request verification services and global risk monitoring circuit breaker modules, thereby eliminating the human investment and months of time costs of repeated running-in of compliance, risk control and production and research teams. The relevant customized solutions can be implemented in a docking cycle of only 2 to 3 weeks. For trading platforms, by accessing this solution, the business department can focus on the core business of running through transactions in the early stage, without having to divert attention to studying edge business logic, and directly use the default configuration recommended by risk control and wallet modules.
For institutions and platforms that intend to apply for a VASP license in Hong Kong, Xinhuo Technology has the following advantages:
l Professionalism: As a comprehensive Tier 1 hosting technology service provider, developed based on the world’s latest MPC-CMP protocol, with 10+ years of experience in asset management at Top 3 exchanges, the team members come from the world’s top universities and companies. During the operation, it successfully resisted multiple industry-level attacks without causing any asset losses, which has been highly recognized by customers and the industry.
l License and compliance: As a listed company in Hong Kong, its subsidiaries New Fire Asset Management (Hong Kong) Co., Ltd. and New Fire Trust Co., Ltd. have obtained Type 4 (providing advice on securities) and Type 9 (providing asset management) licenses issued by the Hong Kong Securities and Futures Commission, and the Trust or Company Service Provider (TCSP) license issued by the Hong Kong Companies Registry. While strictly implementing compliance requirements, New Fire Trust has successfully obtained the SOC 2 Type 2 report, passed the FIPS 140-2 Level 3 international qualification certification, and completed the internal audit of ISO/IEC 27001 certification, with an AUM of up to US$4 billion.
l Localization: We have opened an office in Hong Kong. Our team has been operating in Hong Kong for many years and has powerful hardware and software facilities to ensure that private keys are kept securely in Hong Kong.
The issuance of VASP licenses in Hong Kong is a milestone for the crypto trading industry, bringing new imagination to the fiercely competitive market and placing higher demands on exchanges - whoever can grasp the trend of compliance supervision earlier and more accurately will have a greater chance of gaining a first-mover advantage. As the crypto industry gradually matures, SINOHOPE hopes to use its professional capabilities to help applicants for Hong Kong VASP licenses gain a first-mover advantage and lay a solid foundation, and work with Hong Kong virtual asset service providers to promote Hong Kong's development into a global digital financial center.
