Original author: Meta Era guest author Shark
One year has passed since the Hong Kong Financial Services and the Treasury Bureau issued the "Policy Statement on the Development of Virtual Assets in Hong Kong". How many virtual asset exchanges have been "acquired" by the Hong Kong Securities and Futures Commission? What are the origins, backgrounds and business scopes of these exchanges? Next, let's find out together.
In October 2022, the Financial Services and the Treasury Bureau of Hong Kong issued the "Policy Statement on the Development of Virtual Assets in Hong Kong", which clearly stated that virtual asset exchanges will be licensed on an "opt-in" basis to enable them to reach more investors in the Hong Kong market. The licensing system will enable virtual asset exchanges to open up new distribution channels in Hong Kong, benefiting Hong Kong's huge asset and wealth management market valued at more than US$4.5 trillion.
Not only that, the Hong Kong Financial Services and the Treasury Bureau also explicitly stated that it is "willing" to contact the global virtual asset industry and invite relevant exchanges to explore business opportunities in Hong Kong, and the Hong Kong Securities and Futures Commission has launched a public consultation on the appropriate extent to which retail investors can buy and sell virtual assets under the new licensing system. So, a year has passed, how many virtual asset exchanges have been "incorporated" by the Hong Kong Securities and Futures Commission? What are the origins, backgrounds and business scope of these exchanges? Next, let's take a look together.
In fact, the Hong Kong Securities and Futures Commission has released several lists of licensed and pending virtual asset trading platforms on its official website on September 29. As of now, it "covers" a total of 8 exchanges under its jurisdiction - 2 licensed and 5 pending.
(Note: The information in the above table was obtained on October 16, 2023)
First, let’s take a look at two licensed virtual asset trading platforms, namely OSL Digital Securities Limited under BC Technology Group and Hash Blockchain Limited under HashKey Group.
(Picture from the official website of the Hong Kong Securities and Futures Commission)
For companies that want to obtain a Hong Kong cryptocurrency license, HashKey Exchange and OSL Exchange are exactly the "instructions" they need that are being updated in real time. As the first companies to obtain Hong Kong cryptocurrency licenses, they are carrying the attention of the public and moving forward with the increasingly improved Hong Kong cryptocurrency policies.
They are not only the leaders lurking in the history of cryptocurrency development in Hong Kong, but also the first beneficiaries after Hong Kong opened up virtual asset trading. Next, let’s take a closer look at the actual situation of these two virtual asset trading platforms.
1、HashKey Exchange
Trading platform overview: HashKey Exchange is operated by Hash Blockchain Limited, headquartered in Hong Kong. As a compliant digital asset trading platform operator, it holds Type 1 (Securities Trading) and Type 7 (Providing Automated Trading Services) licenses issued by the Hong Kong Securities and Futures Commission. HashKey Exchange has also obtained ISO 27001 Information Security Management System Certification and ISO 27701 Privacy Information Management System Certification.
Background of main members: According to public information, HashKey Exchange is a trading platform under HashKey Group, and the chairman of HashKey Group is Xiao Feng, the founder of Wanxiang Blockchain Lab. Dr. Xiao Feng has served as the section chief and deputy director of the Securities Management Department of the Shenzhen Branch of the People's Bank of China, deputy director and director of the Shenzhen Securities Administration Office, and deputy director of the Securities Administration Office. HashKey Group was officially established in 2018 to transform into digital asset financial services, and Wanxiang Blockchain Lab itself has also invested in multiple blockchain projects, such as Ethereum, ConsenSys, Polkadot, MakerDAO, etc.
Another core team member of HashKey Exchange is Weng Xiaoqi, former vice president of brand public relations at Huobi. He is currently the COO of HashKey Exchange and the assistant to the chairman of HashKey Group. In addition, the official website of HashKey Group shows that its general manager of tokenization is Liu Jia, who has served as the group's legal director and worked for Tencent, Sidley Austin LLP and Beijing Grandway Law Firm for many years. His main practice areas are private equity and investment funds, cross-border investment and mergers and acquisitions, and domestic and foreign capital markets.
Crypto business scope: According to the official website of HashKey Exchange, four types of trading pairs are currently provided, namely USD, HKD, USDT and USDC. In addition to BTC and ETH trading services, HashKey also launched the AVAX/USD trading pair on September 28. In addition, HashKey Exchange currently supports bank transfer services in 17 countries and regions, including Singapore, the United States, Israel and other places. Users who withdraw cash need to ensure that the bank account opened under their name is in a qualified jurisdiction permitted by the China Securities Regulatory Commission.
2、OSL Exchange
Trading platform overview: OSL is supported by BC Technology Group (863.HK), a fintech and digital asset company. In addition to brokerage, custody, and exchanges, it also provides comprehensive services such as "software as a service".
Background of key members: BC Technology's CFO, Hu Zhenbang, has more than 16 years of experience in the financial field and has worked in many companies including Hong Kong-listed technology companies, investment banks and the Big Four accounting firms. Regulatory Affairs Director Diao Jiajun has served as the Group General Counsel of Yunfeng Financial Group Co., Ltd. (whose shares are listed on the Main Board of the Hong Kong Stock Exchange Limited) and the Head of Legal and Compliance in Asia for Cantor Fitzgerald and BGC Partners. He was appointed as an executive director of BC Technology Group Co., Ltd. on July 11, 2019.
Scope of crypto business: OSL, which holds Type 1 and Type 7 licenses, provides comprehensive services including brokerage, custody, exchange, and "software as a service". In September this year, OSL announced that its custody and automated trading services (ATS) have passed the authoritative SOC 2 Type 2 service qualification audit. It focuses on Hong Kong security token business and supports trading of BTC and ETH. Its current service targets are mainly institutions and professional investors.
Next, there are 5 virtual asset trading platforms that are applying for licenses:
3、BGE
Trading platform overview: BGE was established in 2021 and is a wholly-owned subsidiary of HKE Holdings, a listed company. HKBGE wholly owns HKBGE TSP Limited. HKBGE TSP Limited obtained a TCSP license (Trust or Company Service Provider License) under AMLO in September 2021 to provide virtual asset custody services for HKBGE's trading platform. BGE has been preparing for and has applied for a VATP license since 2022.
Background of key members: On February 1, 2023, Ouyang Jiannan, one of the founding members of HashKey Group, was appointed as the director and CEO of HKBGE. The CEO was Thor Chan, the former CEO and co-founder of the crypto exchange AAX. In addition, HK BGE currently has only two directors, including Ou Jinpei and Ji Danna, who are the company's operations director and business development director respectively. The company's website is currently open only to invited professional investors.
Encrypted business scope: BGE’s official website shows that it is not officially in use at present, and displays prompts such as “in trial operation” and “stay tuned for the official opening”.
4、HKbitEX
Trading platform overview: HKBitEX was established in 2019. Its full Chinese name is "Hong Kong Digital Asset Exchange Co., Ltd.". It is reportedly "one of the first institutions to apply for VATP" to provide digital asset trading services. Its current service targets are mainly professional and institutional investors.
Background of main members: HKBitEX website shows that the company's senior management has a very strong background. It is reported that its chief development director Shi Lin was the co-director of the Hong Kong Listing Review Group before 2020, but he left in July 2021; another key figure is HKBitEX founder Gao Han, who worked at the Hong Kong Stock Exchange and participated in the Hong Kong Stock Connect and Bond Connect. The platform has also had many former employees of the Hong Kong Stock Exchange join. Gao Han also serves as the chairman of Taiji Capital Group, and HKBitEX belongs to the virtual asset exchange business of the group. Taiji Capital previously announced the issuance of the first real estate fund security token issuance (STO) for professional investors, which is also the first fund tokenization fundraising model approved by the Hong Kong Securities and Futures Commission.
Crypto business scope: According to the official website of HKBitEX, it currently mainly provides USD and USDT trading pair services for BTC and ETH. In addition, the exchange also supports over-the-counter transactions and digital asset custody services.
5、HKVAX
Overview of trading platform: HKVAX’s Chinese name is “Hong Kong Virtual Asset Exchange”. The company announced on August 11 that it had obtained the SFC’s approval-in-principle notice to conduct Type 1 and Type 7 regulated activities. Its core products are expected to include over-the-counter (OTC) broker services, institutional-grade trading platforms, and 100% guaranteed custody services, but it is not currently on the licensed list.
Background of main members: HKVAX website shows that the company has 3 co-founders, among which CEO Wu Weiliang was 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). Another co-founder and chief operating officer, Fok Siu-leung, is a qualified accountant registered with the Hong Kong Institute of Certified Public Accountants and is a representative of the Hong Kong Institute of Certified Public Accountants' tax examination scoring team. The third co-founder and technical director, Liu Cheng, came from Alibaba and Ant Financial and has a good performance in blockchain technology and digital currency.
Crypto business scope: HKVAX currently provides 24/7 global over-the-counter trading services to institutions and professional investors. It also has a virtual asset trading platform and corresponding virtual asset custody services (it obtained the Hong Kong TCSP license in the second quarter of this year).
6、VDX
Trading platform overview: VDX is a subsidiary of Victory Securities, a long-established local securities firm in Hong Kong. In February this year, Victory Securities issued an announcement that the Securities and Futures Commission of Hong Kong had accepted the application submitted by Victory Digital Technology Co., Ltd. (Victory Digital Technology, a joint venture of the Group) on February 2, 2023 for a license to conduct Type 1 and Type 7 regulated activities.
Background of main members: The executive directors of Victory Digital Technology include Gao Juan, Chairman of the Hong Kong Securities Association, and Victory Securities was founded by Dr. Gao Detai, who has won the World Outstanding Chinese Award and is known as the "Gold Medal Broker". The company is also a qualified foreign institutional investor (QFII) recognized by the China Securities Regulatory Commission.
Crypto business scope: VDX provides digital asset custody services and is regularly audited by the Big Four accounting firms. In addition, it provides products, services and technologies to financial institutions and individual professional clients, and provides customized solutions in the fields of compliance, trade, regulation, finance and risk reporting.
7、Meex
Trading platform overview: Meex was established in Hong Kong and is supported by a local consortium. It is currently in operation and is preparing to apply to the Hong Kong Securities Regulatory Commission for 1, 7 and VASP licenses with the assistance of Jun He Law Firm. Meex is also an official member of the Hong Kong Web3 Association.
Background of main members: MEEX co-founder and Co-CEO Simon Wu is a well-known virtual asset security technology expert in the industry. His technical team are all from the core technology team of the world's leading virtual asset trading platform. The management team includes executives of companies with Hong Kong Securities Regulatory Commission licenses No. 1, 4, and 9, virtual asset industry operations executives, Hong Kong licensed lawyers, and other people with experience in virtual assets and Hong Kong compliant financial institutions. However, there is less public information about another co-founder Kiki Kwok and Co-CEO Jason Feng.
Encrypted business scope: Meex currently supports cryptocurrency spot trading, but only supports USDT trading pairs of BTC and ETH. Its APP is available on Apple App Store and Google Play. In addition, Meex also provides cryptocurrency storage services, but all services are only open to legal residents who are over 18 years old and hold valid ID cards in non-restricted areas.
Summarize
Since the end of 2022, when Hong Kong announced its embrace of virtual assets and its plan to build a world virtual asset center, the Hong Kong government has made a series of arrangements on regulatory norms. Overall, Hong Kong’s current virtual asset regulatory framework generally incorporates virtual assets into a “licensing-based” financial regulatory system.
The recent JEPX case was the trigger for the Hong Kong Securities Regulatory Commission to announce the latest regulatory optimization measures. However, as the Securities Regulatory Commission’s series of rapid responses and measures are driving the Hong Kong Web3.0 market towards maturity, supervision and industry self-discipline are also being further strengthened.
Even though the road to compliance is full of ups and downs, the old saying has already given us a motto for moving forward - the road is long and arduous, but I will continue to explore. We are already on the road, and these are the difficulties we will eventually overcome.