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Hong Kong approves first retail cryptocurrency exchanges

Written by Nikkei Asia Published on   3 mins read

The exchanges expand their client base as the city establishes itself as a cryptocurrency hub.

HashKey Exchange and OSL have become the first cryptocurrency exchanges in Hong Kong to secure licenses for retail investors to trade on their platforms, two months after the local regulator said it would allow companies to offer such services.

The development is an important step in positioning the city as a crypto hub while other markets remain cautious after the collapse in November of FTX, a high-profile cryptocurrency exchange.

Both Hong Kong exchanges already have licenses from the Securities and Futures Commission that allow them to offer cryptocurrency trading services to professional investors. The new licenses will expand their clientele to mom-and-pop investors.

“We are thrilled to become the first licensed trading platform in Hong Kong dedicated to serving retail users,” Livio Weng, chief operating officer at HashKey Group, owner of the exchange, said in a statement on Thursday.

The approval came on Wednesday night, Weng said. HashKey Exchange was formerly known as HashKey Pro. HashKey has hired KPMG and EY to audit the exchange, and investor funds are kept in segregated accounts, Weng said.

Exchanges that had been operating in Hong Kong before the SFC announced the licensing scheme on June 1 have until the end of March to apply to continue their businesses in the city.

The SFC said exchanges can decide on the cryptocurrencies they offer to retail investors, as long as the assets have big market capitalizations and are liquid enough for investors to trade easily.

HashKey Exchange will start by offering Bitcoin and Ethereum to retail investors in “a few weeks’ time,” said Weng, who expects a million retail users to register on the exchange by the end of 2023.

OSL said in a statement it would offer the same two cryptocurrencies to retail investors.

“Effective immediately, OSL offers retail investors the ability to register on its platform and buy and sell digital asset products, starting with the popular cryptocurrencies bitcoin and Ethereum,” the OSL statement said.

Standard Chartered Bank is working with HashKey to attract clients, and would provide fiat currency to cryptocurrency exchanges and withdrawal services, HashKey said.

Online lender ZA Bank announced in May it was also working with the city’s crypto exchanges to provide similar trading services.

Hong Kong’s banking regulator has met with banks and crypto industry participants, including exchanges and funds, to address concerns such as money laundering.

HashKey Group Chief Financial Officer Eric Zhu said it was understandable that banks are vigilant after a series of crypto collapses last year, and that the company has been working since last August with StandChart for the fiat currency backing.

DBS Hong Kong also wants to offer cryptocurrency products to its Hong Kong clients. “We are working very closely with the SFC to see where we could offer digital assets to our customers,” said DBS Hong Kong Chief Executive Sebastian Paredes at the bank’s first-half earnings conference on Thursday.

The bank is not applying for an exchange license in Hong Kong but is looking to utilize its crypto exchange in Singapore to offer products to Hong Kong clients, Paredes said. The Singapore bank runs a digital assets trading exchange for professional investors in the city-state.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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