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Published: 20:54, August 28, 2023 | Updated: 21:23, August 28, 2023
HK's first licensed retail virtual-asset exchange launched
By Li Xiaoyun in Hong Kong
Published:20:54, August 28, 2023 Updated:21:23, August 28, 2023 By Li Xiaoyun in Hong Kong

Jimmy Chiang Hok-lai (third from right), InvestHK acting director-general, and Norman Chan Tak-lam (center), chairman of the Council of the Institute of Web3.0 Hong Kong, officiate at the launch ceremony of Hong Kong’s first licensed retail virtual asset exchange on Aug 28, 2023. (LI XIAOYUN/ CHINA DAILY)

As Hong Kong vigorously promotes the development of virtual assets and harnesses the advantages of combining financial technology with traditional finance, the city’s first licensed virtual-asset exchange targeting retail investors officially launched on Monday.

Officials and industry insiders believe the launch of HashKey Exchange’s crypto trading platform for retail investors marks a milestone in Hong Kong’s Web3 development.

Norman Chan Tak-lam, chairman of the Council of the Institute of Web 3.0 Hong Kong, called for a balanced approach that safeguards investor rights while promoting fintech innovation

Earlier this month, HashKey and OSL were given the green light by the Securities and Futures Commission (SFC) to upgrade their licenses to expand their business scopes from professional investors to retail investors, making them the first and to date the only two platforms in Hong Kong to be allowed to offer such services.

READ MORE: HK a ‘cradle’ for next virtual asset boom

“The kickoff of HashKey’s exchange demonstrates the SAR government’s proactive embrace of fintech innovation while prioritizing investor protection,” Joseph Chan Ho-lim, undersecretary for financial services and the Treasury, said at the launch ceremony.

He said Hong Kong has made strides in connecting virtual assets with traditional financial markets, as three crypto-asset exchange-traded funds have listed on Hong Kong Exchanges and Clearing, underscoring the tremendous advantages of integrating financial technology with traditional finance.

In October, the Hong Kong Special Administrative Region government issued a policy statement on the development of virtual assets, outlining its position on vision, regulations, and pilot programs, clearly stating the objective of “fostering sustainable and thriving development of virtual assets in Hong Kong”.

With a new regulatory regime of virtual-asset trading platforms having taken effect on June 1, all centralized crypto platforms promoting their services to Hong Kong investors or running in the city must be licensed and regulated by the SFC.

The regime imposes requirements on asset custody, anti-money laundering measures, and risk management for virtual-asset trading platforms.

Jimmy Chiang Hok-lai, InvestHK acting director-general, said that “since the policy statement was issued in October, the department has negotiated with over 100 companies involved in virtual-asset businesses to promote Hong Kong’s favorable environment for the development of crypto.”

“Some of the firms have established their operations in the Cyberport or Hong Kong Science and Technology Parks, signifying the significant potential for virtual asset development in Hong Kong,” he said.

READ MORE: Legislative support key to virtual asset growth

Norman Chan Tak-lam, chairman of the Council of the Institute of Web 3.0 Hong Kong, called for a balanced approach that safeguards investor rights while promoting fintech innovation. He also expressed hope for expedited legislation on virtual assets as a means to propel the vibrant growth of crypto in Hong Kong.

In addition to issuing the world’s first government-backed tokenized green bonds earlier this year, the Hong Kong Monetary Authority has published a consultation conclusion to the discussion paper on crypto assets and stablecoins.

Chan said that the HKMA is poised to introduce regulatory frameworks for stablecoins by 2024, believing that there will be a surge in tokenization of financial products in the future.

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