After the public consultation on the Hong Kong OTC licensing system ended on April 12, OKLink Research Institute published a column in Sing Tao Daily, sharing the research on the Hong Kong OTC market and proposing that "technical supervision is the key to the standardization of Hong Kong's OTC and Web3 ecosystems". OKLink Research Institute believes that with the advancement of OTC supervision and virtual asset spot ETFs, Hong Kong is gradually completing the transformation from a global Web3 follower to a leader.
OKLink Research Institute has always actively participated in the consultation work on virtual asset-related supervision in Hong Kong, and submitted consultation suggestions on the OTC licensing system to the Hong Kong government in early April. Since the second half of 2023, the Institute has been closely following the dynamics of the OTC market, conducting in-depth research on the Hong Kong OTC market through online surveys and field visits, and plans to release the latest OTC research report to the world in the near future. Please continue to pay attention!
The Web3.0 security technology column opened by Hong Kong mainstream media Sing Tao Group. This column provides professional security and compliance advice to Hong Kong practitioners, trading institutions, and regulatory agencies, aiming to promote the development of Hong Kong's Web3.0 industry towards security and compliance.
Jason JiangAt the same time as the Hong Kong virtual asset spot ETF was approved in principle, the OTC market also accelerated into the compliance era. According to the Hong Kong Economic Journal, the public consultation on the Hong Kong OTC licensing system ended on April 12. However, since the system only covers a very small number of currencies such as Bitcoin and Ethereum, some practitioners have concerns. But overall, all parties in Hong Kong are positive and positive about the upcoming OTC regulation at this stage. 1. From "follower" to "leader" Hong Kong is transforming from a "follower" to a "leader" in the field of virtual assets. After more than a year of steady development, this leadership is mainly reflected in: focusing on the deposit and withdrawal of virtual assets, and gradually bringing legal currency stablecoins and OTCs under supervision through the imposition of new licenses, which is leading and unique in the world; at the same time, actively guiding the integration of virtual assets with traditional financial markets, and accelerating the adoption of Web3 innovation with the help of financial tools such as tokenized securities and spot ETFs. In this process, technical supervision plays an increasingly important role. Ren Yunan, executive director, chairman and CEO of OKEx Holdings (01499. HK), said in an interview with the media last year that the licensing system is only the starting point for the compliance development of virtual assets in Hong Kong, and technical supervision is the key to regulating the Web3 market in the future. Hong Kong recently approved the issuance of virtual asset spot ETFs in a physical delivery mode. We believe that a big reason for this is that the regulatory authorities and relevant institutions are confident that they can use technical means and compliance tools such as KYT and KYA to deal with various risks that may be involved in the custody and delivery of virtual assets. In the process of OTC supervision, we also believe that Web3 regulatory technology with on-chain data as the core will become an indispensable part.
In this response to the public consultation, Ouke Cloud Chain Research Institute also strongly recommended that the Hong Kong government consider using more Web3 regulatory technologies and encourage OTC license applicants to equip compliance products such as blockchain analysis tools to enhance regulatory transparency. and reduce compliance costs. 2. Why is it recommended to adopt more Web3 compliance technologies? Although virtual asset trading fraud has occurred frequently in recent years, the public has become more alert to virtual asset activities, and OTC risks that were often ignored before have been gradually exposed. We found that although the services provided by OTC merchants are similar to traditional currency exchange services, there are significant differences in business processes and risk profiles. Hong Kong's OTC business is more of a complex off-chain + on-chain hybrid model, that is, the currency side completes off-chain transfers through cash, but the asset side needs to use the blockchain network to conduct on-chain transactions. This hybrid model is more complex than traditional currency exchange services, and it also means that OTC risks will not only originate from the legal currency system, but may also come from newer and more complex on-chain links. In order to match this hybrid model, static risk identification and prevention and control technology with KYC as the core cannot meet the requirements, and the market needs a more flexible and targeted Web3 compliance solution. Figure: Common Hong Kong OTC physical store transaction process Source: OTC Research Report of Ouke Cloud Chain Research Institute (forthcoming) Therefore, we recommend that OTC merchants interested in applying for licenses in Hong Kong consider integrating KYA and KYT technologies into existing KYC During the process, we deeply explore the characteristics of the OTC chain, and proactively identify and promptly respond to various types of bad or fraudulent transactions that may occur through wallet address risk screening and real-time monitoring of transactions, thereby changing the passive situation of dealing with on-chain risks and improving prevention and combat. OTC Money Laundering Initiatives. At the same time, the use of blockchain analysis tools can also help regulators monitor the OTC market more effectively and improve regulatory efficiency through visual interfaces. According to the survey results of the Cambridge Regulatory Technology Laboratory in February this year, currently regulatory technology mainly focuses on banking business and investor protection, while only 21% of institutions regard virtual asset supervision as a priority. While the Hong Kong government is vigorously promoting Web3, its active adoption of blockchain analysis tools may set an example for global regulation. Any healthy development industry cannot hide in a dark corner forever. Only by letting the sunshine shine in can there be hope.#比特币减半 $BTC
