After OSL Exchange, HashKeyExchange and HKVAX, the licensed virtual asset trading platforms (VATPs) in Hong Kong have welcomed four new members.
Source: PA News
Author: Nancy
After OSL Exchange, HashKeyExchange and HKVAX, the licensed virtual asset trading platforms (VATPs) in Hong Kong have welcomed four new members. On December 18, the Hong Kong Securities and Futures Commission (SFC) announced that it has granted licenses to four virtual asset trading platforms, including Yunzhanghao Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group and Thousand Whales Technology.
At the same time, the Hong Kong SFC is accelerating the approval process for virtual asset licenses and formulating a clear roadmap for the licensing procedure, in order to further expand Hong Kong's footprint in the Web3 field.
Four platforms granted licenses by the Hong Kong SFC
This time, the Hong Kong SFC approved 4 platforms at once, bringing the total number of licensed virtual asset trading platforms in Hong Kong to seven.
HKbitEX: Launched by former HKEX executives, has raised tens of millions of US dollars in funding
HKbitEX is launched by Hong Kong Digital Asset Trading Group Limited, established in 2019, and is a compliant, regulated digital asset spot and over-the-counter (OTC) trading platform for global professional investors.
It is reported that the parent company of Hong Kong Digital Asset Trading Group is Taihe Capital Group, which mainly provides tokenization asset services, including capital markets and wealth management, digital asset exchanges, and Web3 SaaS and technology R&D. In September 2023, Taihe Capital also announced the launch of Hong Kong's first real estate fund security token offering (STO), issuing the token PRINCE through its subsidiary Pioneer Asset Management's closed-end fund, with a target of raising about HK$100 million. The founder of Taihe Capital, Gao Han, previously worked at the Hong Kong Stock Exchange, mainly responsible for promoting the Exchange's products in mainland China, including Stock Connect and Bond Connect. Taihe Capital has also attracted many former HKEX executives to join.
As one of the first institutions to apply for a virtual asset trading platform license from the Hong Kong SFC, HKbitEX has received multiple rounds of financing, including a $10 million Series A2 round in December 2022, led by Axion Global Investment Limited, a subsidiary of Hong Kong-listed company Anling International, and Hanwha Asset Management, with participation from Deding Innovation Fund, Jianfeng Capital Management, Lenovo Capital and Lingzhen Capital, among others; and a $9 million Pre-B round of $300 million in November 2021.
Accumulus: Backed by a Fortune 500 company in China
The virtual asset trading platform Accumulus is launched by Yunzhanghao Greater Bay Area Technology (Hong Kong) Limited, went live in Hong Kong in April 2023 and officially submitted its virtual asset trading platform license application to the Hong Kong SFC at the end of the same year.
Yunzhanghao Hong Kong is registered by Yunzhanghao and is the only overseas business headquarters, with the group already having obtained an outbound direct investment quota of RMB 985 million approved by the National Development and Reform Commission and other authorities in mainland China, supporting Yunzhanghao Hong Kong to focus on Web 3.0 business expansion. According to official information, Yunzhanghao is the largest online human resources service company in China, serving 110 million new employment form workers (freelancers) from 138 countries and regions, and was selected as one of the "Top 500 Chinese Enterprises 2024" with a revenue of RMB 108.4 billion this year.
DFX Labs: The team has years of blockchain experience
DFX Labs (DFX Labs Company Limited) was the last applicant for a Hong Kong virtual asset trading platform license last year. The DFX Labs team has extensive experience in Bit blockchain and fintech, such as Chief Operating Officer Simon Au Yeung, who has served as CEO of Blockchain Finance and virtual asset trading platform BGE, as well as co-chair of the Hong Kong IEEE, and Chief Technology Officer David H., who has worked at Morgan Stanley, Dell Technologies and HashKey Group.
EX.IO: Sina's online brokerage is the main investor
EX.IO (formerly xWhale), launched by Thousand Whales Technology (BVI) Limited, is the first and only licensed institution in Hong Kong with a brokerage background, with Sina's online brokerage Huasheng Capital Group as the main investor, along with Longlin Capital and Weixin Finance (HKG: 2003) as investors. EX.IO was originally named xWhale and was established in May last year after BusyWhale, a Web3 trading platform, reached a strategic agreement with Huasheng Securities.
Releases a six-step roadmap for the licensing process, and will set up an advisory group in early 2025
Although Hong Kong has expressed a strong determination to develop Web3 and has attracted many crypto ecosystem projects/platforms to apply for entry, there have been instances of licenses being revoked during the transition period, with only 11 platforms being considered as license applicants as of June, posing challenges that cannot be ignored.
To improve the approval efficiency and ensure compliance, Hong Kong launched an inspection program in June this year and completed on-site inspections of all license applicants, which has had a direct effect. Therefore, the Hong Kong SFC has decided to adopt this approach when engaging external assessment experts for the second stage evaluation of virtual asset trading platforms.
"The Commission has been actively communicating with the senior management and ultimate controllers of virtual asset trading platforms, which helps us clarify the regulatory standards to be met and accelerate the regulation of virtual asset trading platforms," said Ip Chi-hang, Executive Director of the Intermediaries Division of the Hong Kong SFC.
In the latest circular, the Hong Kong SFC has also formulated a clear roadmap for the licensing process for virtual asset trading platforms:
1. Conduct on-site inspections and provide feedback, requiring the platforms to submit a rectification plan.
2. After reaching a consensus on the rectification plan, a conditional license will be granted, and the platform will continue to complete the rectification measures according to the plan, and conduct penetration testing and vulnerability assessment and obtain satisfactory results, before being allowed to operate within a restricted business scope.
3. Penetration testing and vulnerability assessment should be conducted by an independent third party, and the management of the platform should ensure that all important and critical rectification measures are continuously taken.
4. After completing the rectification measures, vulnerability assessment and test run, the platform may be allowed to operate within a restricted business scope.
5. The platform must hire external experts to evaluate the revised policies and procedures (including revised procedures and controls), and the SFC will oversee the entire second stage evaluation process, clarify regulatory requirements and provide feedback on the evaluation results.
6. After the second stage evaluation is completed, the SFC will revoke the licensing conditions restricting the business scope, and this stage of evaluation will focus on ensuring that the policies, procedures, systems and control measures (policies and procedures) of the virtual asset trading platform are properly designed and implemented, and will be conducted through direct verification.
"We are trying our best to regulate this emerging market, but it is by no means an easy task, as it is an existing massive market with advanced technology, borderless and imperfect regulation. The Hong Kong SFC will set up a formal advisory group for all licensed platforms in early 2025, with each licensed institution sending its senior management as representatives. This will allow the Hong Kong SFC to fully listen to and consider their views. This will enable us to pool wisdom and systematically prioritize development issues based on investor protection," Ip Chi-hang previously revealed, and the Hong Kong SFC has also recently disclosed that it will provide more guidance on the licensing scheme for new corporations applying for the second virtual asset trading platform license in early 2025.
