Hong Kong Greenlights First Virtual Asset Exchange

Hong Kong’s securities regulator granted the first business licenses for digital asset trading as the city moves to bring crypto trading under regulatory oversight.

BC Technology Group’s OSL Digital Securities Ltd. (OSL) unit obtained a securities trading license and a license to provide automated trading services from the Hong Kong Securities and Futures Commission (SFC), according to a company statement.

OSL said it was the first virtual asset platform to be licensed by the SFC after the Hong Kong regulator tightened its regulation of such businesses. SFC wasn’t available for comment.

In November 2019, the SFC introduced a new regulation requiring institutions with virtual-assets trading businesses to be licensed, a move seen as an effort to tighten scrutiny of broader crypto trading. OSL said it applied to the SFC for a license shortly after the new rule was issued.

Shares of BC Technology Group have picked up steam over the past two months, rising from HK$9.18 a share at the Oct. 15 close to HK$17 Dec. 15, an 85% surge. Fidelity-backed BC Technology Group is a brand marketing company that expanded into the blockchain and virtual asset business since 2018.

The licenses permit OSL to operate regulated brokerage and automated trading services for digital assets including security tokens such as bitcoin and ethereum. They were granted after the company opted into the SFC’s virtual asset regime and underwent the SFC’s rigorous vetting requirements, the company said.

OSL obtained the licenses as Hong Kong regulators move to tighten regulation of the booming crypto trading sector. The city government said in November it would draft laws to require digital asset trading platforms to be licensed.

"This is a significant day for us," OSL CEO Wayne Trench told Caixin. Obtaining the licenses adds the "final piece of the puzzle" to the company's business structure, he said. OSL offers brokerage, electronic trading and custody services to institutional clients.

The company said it also applied for a virtual asset exchange license with the Monetary Authority of Singapore. Trench said feedback from the Singaporean authority can be expected in the next six months.

Contact editors Han Wei (weihan@caixin.com) and Bob Simison (bobsimison@caixin.com).

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