Following OSL Exchange, HashKeyExchange, and HKVAX, Hong Kong's licensed virtual asset trading platforms (VATP) welcome four new members.
Source: PA News
Article Author: Nancy
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 the issuance of 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 the licensing procedure to further expand Hong Kong's presence in the Web3 field.
Four platforms have been licensed by the Hong Kong Securities and Futures Commission.
This time, the Hong Kong Securities and Futures Commission has approved four platforms at once, increasing the number of licensed virtual asset trading platforms in Hong Kong to seven.
HKbitEX: Launched by former senior executives of the Hong Kong Stock Exchange, has secured tens of millions of dollars in financing.
HKbitEX was launched by Hong Kong Digital Asset Trading Group Limited, established in 2019, and is 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 three major sectors: capital markets and wealth management, digital asset exchanges, and Web3 SaaS and technology research and development. In September 2023, Taiji Capital announced the launch of Hong Kong's first real estate fund security token offering (STO), with the token PRINCE issued by its subsidiary Vanguard Asset Management's closed-end fund, aiming to raise approximately 100 million HKD at that time. Taiji Capital's founder, Gao Han, previously worked at the Hong Kong Stock Exchange, mainly responsible for promoting Hong Kong Stock Exchange products in mainland China, including Stock Connect and Bond Connect, and Taiji Capital has also attracted several senior executives from the Hong Kong Stock Exchange.
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 secured multiple rounds of financing, including in December 2020, HKbitEX announced the completion of $10 million in Series A2 financing, led by Axion Global Investment Limited, a subsidiary of a Hong Kong listed company, Anling International, along with participation from other investors including Deding Innovation Fund, Jianfeng Capital Management, Lenovo Ventures, and Lingfeng Capital; in November 2021, HKbitEX announced the completion of $9 million in Pre-B round financing with a total of $300 million.
Accumulus: Backed by a Fortune 500 company in China.
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 its application for a virtual asset trading platform license to the Hong Kong Securities and Futures Commission at the end of the same year.
Cloud Account Hong Kong is registered by Cloud Account and is the only overseas business headquarters. The group has obtained a direct investment quota of 985 million RMB approved by the National Development and Reform Commission and other authorities, supporting Cloud Account Hong Kong to focus on expanding its business in Web 3.0. According to official sources, Cloud Account is China's largest online human resources service company, serving 110 million new employment form workers (freelancers) from 138 countries and regions, and was selected as one of the '2024 Top 500 Enterprises in China' with a revenue of 108.4 billion yuan this year.
DFX Labs: The team has years of experience in blockchain.
DFX Labs (DFX Labs Company Limited) is the last applicant for a virtual asset trading platform in Hong Kong last year. The team at DFX Labs has extensive experience in the blockchain and fintech fields. For example, COO Simon Au Yeung previously served as CEO of Blockchain Finance and virtual asset trading platform BGE, as well as co-chair of Hong Kong IEEE, while CTO David H. has worked at Morgan Stanley, Dell Technologies, and HashKey Group.
EX.IO: Internet brokerage under Sina as 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 Sina's subsidiary, the internet brokerage Huasheng Capital Group, as the main investor, along with investments from Longling Capital and Weixin Jinke (HKG: 2003). EX.IO was initially named xWhale and was established after a strategic agreement was reached between the original Web3 trading platform BusyWhale and Huasheng Securities in May last year.
Release a six-step roadmap for the licensing procedure, and a consultation group will be established at the beginning of next year.
Although Hong Kong has shown a strong determination to develop Web3, attracting many crypto ecosystem projects/platforms to apply for membership, there have been instances of licenses being withdrawn during the transitional period for license applications. By June, only 11 platforms were considered licensed applicants, and the challenges faced by Hong Kong cannot be ignored.
To enhance approval efficiency and ensure compliance, Hong Kong launched an inspection plan in June this year and completed relevant on-site inspections for all licensed applicants, achieving direct results. Therefore, the Hong Kong Securities and Futures Commission decided to continue this practice when hiring external evaluation experts for the second phase assessment of virtual asset trading platforms.
"Our association has always proactively communicated 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 accelerate the regulatory standards for virtual asset trading platforms," said Ye Zhiheng, Executive Director of the Intermediary Institution Department of the Hong Kong Securities and Futures Commission.
In the latest circular, the Hong Kong Securities and Futures Commission also established a clear roadmap for the licensing procedure for virtual asset trading platforms:
1. On-site inspection and provision of opinions, requiring the platform to submit a corrective action plan.
2. After reaching consensus on the correction plan, a conditional license will be granted, and the platform will continue to implement the corrective measures as planned, conduct penetration testing and vulnerability assessments, and achieve satisfactory results before being allowed to operate within the restricted business scope.
3. Penetration testing and vulnerability assessments should be conducted by independent third parties, and the platform's management should ensure that all significant and critical corrective measures continue to be taken.
4. After completing corrective measures, vulnerability assessments, and testing, the platform may be allowed to operate with a license within the restricted business scope.
5. The platform must hire external experts to assess the revised policies and procedures (including revised procedures and monitoring), and the Securities and Futures Commission will oversee the entire second phase assessment process, clarify regulatory provisions, and provide opinions on the assessment results.
6. The Securities and Futures Commission will revoke the licensing conditions related to the restricted business scope after the completion of the second phase assessment, which will focus on ensuring that the virtual asset trading platform's policies, procedures, systems, and monitoring measures (policies and procedures) are appropriately designed and implemented, and will be directly verified.
"We are working hard to regulate this emerging market, but it is by no means easy, as it is a large existing market that is technologically advanced, borderless, and has underdeveloped 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 delegating senior personnel to serve as representatives. This way, the Hong Kong Securities and Futures Commission will be able to fully listen to and consider their views. This will enable us to brainstorm and systematically prioritize development matters based on investor protection," Ye Zhiheng previously revealed. The Hong Kong Securities and Futures Commission also disclosed that it will provide more guidance on the licensing scheme for new corporations applying for a second virtual asset trading platform license in early 2025.
