The third compliant trading platform in Hong Kong is born.

Since the opening of digital asset trading, from the progress of various work, it seems that the practices of the regulatory authorities in Hong Kong, China have grasped the key points and solved the dilemma faced by the encryption industry.

Less than ten days later, on August 11th, Hong Kong welcomed the birth of the third compliant digital asset trading platform.

A company named Hong Kong Virtual Asset Exchange (HKVAX) has been issued a provisional approval notice by the Securities and Futures Commission (SFC) of Hong Kong, allowing it to engage in Type 1 and Type 7 regulated activities. It becomes the third licensed digital asset trading platform in Hong Kong after HashKey and OSL.

HashKey and OSL made history on August 3rd by becoming the first to conduct digital asset trading business in Hong Kong.

According to the provisional approval notice issued by the SFC for the digital asset trading platform license, Hong Kong Virtual Asset Exchange (HKVAX) will provide institutional-grade trading platform, custodial solutions, and over-the-counter brokerage services once it obtains final approval for Type 1 (Securities Trading) and Type 7 (Automated Trading Service) licenses. This will enable customers to trade between fiat currency and digital assets.

Past events have shown that the trading aspect is crucial for building the digital asset ecosystem. It is not dispensable but rather an area with numerous problems prone to scams.

After observing for a period of time, it is apparent that the Hong Kong authorities have focused their attention on the regulation of digital asset exchanges, rather than spreading their limited resources thin to deal with the specific issues arising from the infinite variety of digital assets.

They aim to promote the vigorous development of the blockchain and encryption industry while avoiding chaos.

How do the regulatory authorities in Hong Kong consider this issue?

To find an answer, we can look into the information conveyed by the head of the SFC in public speeches.

According to Julia Leung Fung-yee, the Chief Executive Officer of the Securities and Futures Commission (SFC):

Cryptocurrency trading is an important aspect of the virtual asset ecosystem.

Including virtual asset providers in the regulatory system is the only way to embrace innovation and enhance market trust after the bankruptcy of FTX, a cryptocurrency exchange.

When discussing Hong Kong’s regulation of Web3 following the collapse of the cryptocurrency exchange FTX in November 2022, Julia Leung Fung-yee explained that including virtual asset providers in the regulatory system is the only way to embrace innovation and enhance market trust after FTX’s bankruptcy.

In June of this year, during an event held in Bangkok, Julia Leung Fung-yee spoke about Hong Kong’s new digital asset licensing regime and stated that the SFC recognizes that cryptocurrency trading is at the core of the thriving virtual asset ecosystem.

“Our regime may be seen as strict, but we have always been transparent, consistent, and predictable.” She believes that these factors will contribute to the future growth and development of Hong Kong’s blockchain and cryptocurrency industry.

Julia Leung Fung-yee also mentioned that Hong Kong’s cryptocurrency licensing regime is a good example of China’s “One Country, Two Systems” policy. Since 2021, mainland China has banned cryptocurrencies, while Hong Kong has taken a different approach, creating a welcoming environment for the encryption industry.