Author: Nancy, PANews
After OSL Exchange, HashKeyExchange, and HKVAX, Hong Kong's licensed virtual asset trading platform (VATP) welcomes four new members. On December 18, the Hong Kong Securities and Futures Commission announced that it has issued licenses to four virtual asset trading platforms under the fast-track licensing procedure, including Cloud Account Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group, and Thousand Whales Technology.
Meanwhile, the Hong Kong Securities and Futures Commission is accelerating the approval process for virtual asset licenses and formulating a clear roadmap for licensing procedures to further expand Hong Kong's landscape in the Web3 field.
Four platforms were licensed by the Hong Kong Securities and Futures Commission.
This time, the Hong Kong Securities and Futures Commission approved four platforms at once, increasing the number of licensed virtual asset trading platforms in Hong Kong to seven.
HKbitEX: Launched by a former HKEX official, has secured tens of millions of dollars in financing
HKbitEX was launched by Hong Kong Digital Asset Trading Group Limited in 2019, dedicated to providing compliant and regulated digital asset spot trading and over-the-counter (OTC) trading platforms for global professional investors.
It is reported that the parent company behind the Hong Kong Digital Asset Trading Group is Taiji Capital Group, which mainly provides tokenized asset services, including capital markets and wealth management, digital asset exchanges, and Web3 SaaS and technology R&D in three major sectors. In September 2023, Taiji Capital announced the launch of Hong Kong's first real estate fund security token offering (STO), with a target fundraising of approximately 100 million Hong Kong dollars through the token PRINCE issued by its subsidiary Pioneer Asset Management's closed-end fund. The founder of Taiji Capital, Gao Han, previously served at HKEX, mainly responsible for promoting HKEX's products in the mainland, including Stock Connect and Bond Connect, and Taiji Capital has also attracted several senior executives from HKEX.
As one of the first institutions to apply for a virtual asset trading platform license from the Hong Kong Securities and Futures Commission, HKbitEX has received multiple rounds of financing, including in December 2020, when HKbitEX announced the completion of a $10 million A2 round of financing, led by Axion Global Investment Limited, a subsidiary of a Hong Kong listed company, and Hanwha Asset Management, with participation from other investors including De Ding Innovation Fund, Jianfeng Capital Management, Lenovo Capital, and Lingfeng Capital; in November 2021, HKbitEX again announced the completion of $9 million Pre-B round financing with a total of $300 million.
Accumulus: Backed by China's top 500 enterprises
The virtual asset trading platform Accumulus was launched by Cloud Account Greater Bay Area Technology (Hong Kong) Limited, went live in Hong Kong in April 2023, and officially submitted an application for a virtual asset trading platform license to the Hong Kong Securities and Futures Commission at the end of the year.
Cloud Account Hong Kong is registered by Cloud Account and is the only overseas business headquarters. The group has obtained an investment quota of 985 million RMB for foreign direct investment approved by the National Development and Reform Commission and others, supporting Cloud Account Hong Kong to focus on expanding its business in Web 3.0. According to official information, Cloud Account is the largest online human resources service company in China, serving 110 million new employment model workers (freelancers) from 138 countries and regions, and was selected as one of the “2024 China Top 500 Enterprises” with a revenue of 108.4 billion yuan this year.
DFX Labs: The team has years of experience in the blockchain industry
DFX Labs (DFX Labs Company Limited) is the last applicant for a virtual asset trading platform in Hong Kong last year. DFX Labs' team has rich experience in blockchain and fintech, for example, Chief Operating Officer Simon Au Yeung previously served as CEO of Blockchain Finance and virtual asset trading platform BGE, as well as co-chair of IEEE Hong Kong, while Chief Technology Officer David H. has worked at Morgan Stanley, Dell Technologies, and HashKey Group.
EX.IO: An internet brokerage under Sina is the main investor
EX.IO (formerly known as xWhale), launched by Thousand Whales Technology (BVI) Limited, is Hong Kong's first and only licensed institution with a brokerage background, with Huasheng Capital Group, an internet brokerage under Sina, as the main investor, along with Longling Capital and Weixin Jinke (HKG: 2003). EX.IO was originally named xWhale and was established last May after a strategic agreement between the original Web3 trading platform BusyWhale and Huasheng Securities.
Released a six-step roadmap for the licensing procedure, with a consultation group to be established early next year
Despite Hong Kong's strong determination to develop Web3, which has attracted many crypto ecosystem projects/platforms to apply for membership, there have been cases of licenses being constantly revoked during the transition period of license applications. By June, only 11 platforms were treated as licensed applicants, and the challenges facing Hong Kong cannot be ignored.
In order to enhance approval efficiency and ensure compliance, Hong Kong launched an inspection program in June this year, completing relevant on-site inspections for all licensed applicants, achieving direct results. Therefore, the Hong Kong Securities and Futures Commission decided to adopt this practice when appointing external evaluation experts for the second phase evaluation of virtual asset trading platforms.
“Our company will always actively communicate with the senior management and ultimate controllers of virtual asset trading platforms. This helps us clarify the regulatory standards that need to be met and accelerates the regulatory standards for virtual asset trading platforms,” said Ye Zhiheng, Executive Director of the Intermediary Institutions Department of the Hong Kong Securities and Futures Commission.
In the latest circular, the Hong Kong Securities and Futures Commission also formulated a clear roadmap for the licensing procedures of virtual asset trading platforms:
1. On-site inspections, providing opinions, and requiring the platform to submit corrective action plans.
2. After consensus is reached on the corrective plan, conditional licenses will be granted, and the platform will continue to complete corrective measures according to the plan, conduct penetration testing and vulnerability assessments, and obtain satisfactory results before it can operate within the restricted scope of business.
3. Penetration testing and vulnerability assessments should be conducted by independent third parties, and the platform's management should ensure that all important and critical corrective measures continue to be taken.
4. After completing corrective measures, vulnerability assessments, and test trading, the platform may be allowed to operate under a restricted license.
5. The platform must hire external experts to evaluate the revised policies and procedures (including revised procedures and monitoring). The Securities and Futures Commission will supervise the entire second phase evaluation process, clarify regulatory requirements, and provide opinions on the evaluation results.
6. The Securities and Futures Commission will revoke the licensing conditions related to the scope of business restrictions after the completion of the second phase of evaluation. This phase of the evaluation will focus on ensuring that the policies, procedures, systems, and monitoring measures (policies and procedures) of the virtual asset trading platforms are appropriately designed and implemented, and will be conducted through direct verification.
“We are working hard to regulate this emerging market, but it is by no means an easy task, as it is a vast existing market with advanced technology, no borders, and imperfect regulations. The Hong Kong Securities and Futures Commission will establish a formal advisory group for all licensed platforms at the beginning of 2025, with each licensed institution appointing senior personnel as representatives. This will allow the Hong Kong Securities and Futures Commission to fully listen to and consider their views. This will enable us to brainstorm and systematically prioritize investor protection-based development issues,” Ye Zhiheng previously revealed. The Hong Kong Securities and Futures Commission also disclosed that it would provide more guidance on licensing plans for new entities applying for a second virtual asset trading platform license at the beginning of 2025.