Asia Crypto: Is Hong Kong rising?
In November 2022, Hash Blockchain Limited (HBL), a subsidiary of Hong Kong-headquartered HashKey Group, was issued the first crypto license in two years by the Securities and Futures Commission (SFC), following the local government’s refreshed commitment to develop the city as a virtual asset hub, announced during the Hong Kong Fintech Week.
The approval allows HBL to operate a virtual asset trading platform, under a Type 1 (dealing in securities) license and a Type 7 (providing automated trading services (“ATS”)) license for professional investors. Under the Hong Kong Securities and Futures Ordinance, individual professional investors are required to have a portfolio of not less than HK$8 million.
In February this year, HBL also obtained approval from the SFC to conduct an off-platform virtual asset trading (“OTC”) business, whereby it can act as the intermediary to facilitate trades between two parties, even if they wish to trade tokens that are not listed on the exchange’s order book.
This past week, HBL announced that it is accepting early sign-ups to its HashKey PRO service for professional investors (PIs) on a limited basis. Initially, the exchange is operating from 9am to 5pm on Hong Kong business days and will move to a 24/7 operation at full launch, expected during Q2. It will offer some of the most liquid virtual assets such as BTC, ETH, USDC and fiat trading pairs, with plans to add more in the pipeline upon meeting the token admission requirements as set out by the SFC.
Client funds are held in segregated accounts and separated from HashKey PRO’s operations, ensuring that they cannot be used for other purposes and that they will remain readily available for withdrawal at any time. Additionally, client funds are protected by comprehensive insurance in respect of HashKey PRO’s wallet infrastructure (both cold and hot wallets), safeguarding client assets in the event of any unforeseen circumstances.
Initially, HashKey PRO has established partnerships with ZA Bank and Bank of Communications (Hong Kong) as settlement banks to facilitate the depositing and withdrawal of fiat currencies. The platform will continue to expand its options and partnerships with other local and international financial institutions.
In other news, Coinspeaker reported that crypto lender Amber Group considers a potential sale of its Japan subsidiary, which it had acquired in February 2022 from DeCurret, amid plans to secure a Hong Kong trading license.
With both Coinbase and Kraken previously withdrawing from the overcrowded Japanese market, the consolidation of the 30+ cryptocurrency exchanges that were licensed at the beginning of 2023 continues.
Now that Hong Kong has established “regulatory clarity”, the lack of which is so often bemoaned by the crypto community, it appears poised to establish itself as an Asian crypto center.
Although Japan has been very restrictive with regards to the listing of new tokens, its cautious approach is now being mirrored by other regulators, such as the SFC, and the Dubai Financial Services Authority (DFSA), for example. This also implies that Hong Kong will certainly not catch up over night, however, Asia as a whole has become much more accommodating to this industry, while the US has moved backwards.
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