An inventory of the current status of 14 licensed/shen-licensed virtual asset trading platforms in Hong Kong

Author: Bowen; Source: Bailu Living Room

As far as the Hong Kong virtual asset market is concerned, the most important part in 2023 must be the virtual asset trading platform The implementation of the licensing system.

Whether it is Bitcoin or other virtual assets, trading is always its most important application scenario. The global market has always regarded compliant exchanges as one of the focus of regulations. The United States, Canada, South Korea and other countries have already launched compliant exchange operating systems to regulate the development of the virtual asset market.

There is no doubt about Hong Kong’s determination to build the world’s Web 3.0 financial center. If it wants to quickly catch up with the global market, its first priority is to launch a compliant virtual asset trading platform to provide the most basic guarantee.

In December 2022, the Hong Kong Legislative Council passed the "Anti-Money Laundering and Terrorist Financing (Amendment) Bill 2022";On June 1, 2023, the "Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill" was passed A new licensing system specifically designed for central virtual asset trading platforms (virtual asset trading platforms) under the Terrorist Financing Ordinance has officially come into effect. Hong Kong’s virtual asset trading platform has entered the era of compliance.

OSL and Hashkey have already obtained compliance licenses, are ahead of the curve, and are vigorously expanding their business; 12 institutions followed suit and became license applicants, vowing to carve out their own space in the Hong Kong virtual asset market .

In this article, Bailu Living Room analyzes OSL, Hashkey and 12 companies for readers The recent development of virtual asset license applicants gives a clear picture of the virtual asset trading platform war in Hong Kong.

(1) OSL and Hashkey lead the way with licenses

When it comes to Hong Kong’s compliant virtual asset trading platform, the names of OSL and Hashkey are naturally mentioned. On August 3, 2023, the two platforms announced on the same day that they had received approval from the China Securities Regulatory Commission to complete the license upgrade and could provide virtual asset trading services to retail customers. Compliance exchanges have officially entered the era of retail investors.

OSL

OSL has been operating at a loss in the Hong Kong virtual asset market for many years. In 2023, the overall business operation is finally on track.

In the second half of the year, Hong Kong’s virtual asset policies were implemented one after another; followed in October, the approval of the U.S. Bitcoin spot ETF is expected to trigger a bull market. OSL, which has been planning for a long time, has finally waited for a good opportunity and has successively reached cooperation with Harvest International, Huaying Securities, Interactive Brokers, Mulan Asset Management and other institutions to enhance OSL's position in the Hong Kong virtual asset market.

For OSL, policy changes have also prompted OSL to change its bloodline to adapt to market development. On November 14, 2023, OSL announced on its official website that it had received a strategic investment of approximately HK$710 million from BGX Group. BGX’s shareholding reached 29.97%, making it the largest shareholder of OSL (the original BC Technology Group has been renamed). Bitget finally entered the Hong Kong virtual asset market in its own compliant way.  

On January 12, 2024, the transaction between BGX and OSL was completed. Subsequently, the board of directors was reorganized and Pan Zhiyong, currently the CEO of BGX, was appointed as the new chairman and chief executive officer.

In 2024, as the U.S. SEC approves the listing of Bitcoin spot ETFs, a wave of capital from institutional investors is very likely to enter the virtual asset industry to further consolidate its role in the traditional financial industry. After Pan Zhiyong took over, he determined four strategic pillars for OSL in 2024: global expansion, service innovation, digital financial collaboration and compliance standards. He hopes to make good use of OSL's existing compliance and technical advantages to achieve results.

Whether OSL can seize the opportunities brought by these developments this time, everyone is waiting for his performance.

Hashkey

Hashkey still maintains its leading position in the Hong Kong virtual asset market.

Four months after its launch, Hashkey Exchange has more than 150,000 users and an average daily trading volume of US$630 million. Currently, 18 types of virtual assets are supported for trading on the platform. At present, more than 10 brokerage fund comprehensive accounts have been opened, and it has cooperated with more than 20 institutions. Six Hong Kong listed companies: Shengyang Group, Hushi Media, Yanke Group, Xinhuo Technology, Linekong Interactive, and Huake Intelligent Investment all chose to open accounts at Hashkey.

In addition, the insurance platform OneDegree will officially provide insurance covering hot and cold wallets to Hashkey Exchange in November 2023. Hashkey has reached cooperation with China Asset Management and Hamsa to jointly explore tokenized product innovation.

On January 16, 2024, Hashkey Group completed nearly US$100 million in Series A financing at a valuation of more than US$1.2 billion. New investors include large institutional investors, Web3 institutions and strategic cooperation partner.

Hashkey and its leader Dr. Xiao Feng have always put compliance first. Advocates and promoters. In the context of Hong Kong’s compliance, Hashkey took the lead, and the results are not surprising.

However, in the global compliance trend, crypto unicorns such as Binance and OKX are also gradually embracing supervision and embarking on the path of compliance. When these powerful institutions enter the same compliance starting line as Hashkey, what strategies will Hashkey use to deal with the challenges from them? Worth the wait.

(2) 12 license applicants followed closely behind

OSL and Hashkey They still need to continue to defend the status they have achieved. After them, senior Web3 teams, traditional financial institutions, and pioneers in other industries have entered the game to compete for the cake of Hong Kong’s virtual asset business.

HKVAX

On August 11, 2023, HKVAX received an in-principle approval notice from the Hong Kong Securities and Futures Commission to carry out Category 1 and The seventh type of regulated activity (Virtual Asset License No. 1&7) will become the third licensed virtual asset trading platform in Hong Kong. At the end of 2023, HKVAX conducted strategic fundraising and expressed its intention to apply for a VASP license.

According to public information, HKVAX CEO Wu Weiliang was the CEO of CoinSuper Premium, a crypto-asset trading platform owned by Hong Kong’s traditional financial group Vanguard Group. Before CoinSuper, CEO Wu Weiliang worked with top financial institutions including Morgan Stanley, JPMorgan Chase and Wanfang Asset Management, and served as the managing director of CITIC Futures International.

 From left to right: Chief Operating Officer Fok Siu-leung and Chief Executive Officer Ng Wai-liang

In January 2024, HKVAX CEO Ng Wai-liang attended the "2024 Qingdao·Hong Kong and Macau Financial Night Event", At the meeting, Wu Weiliang shared the opportunities and challenges for Qingdao enterprises to develop virtual asset business.

Wu Weiliang said: "There are 'exclusive' blockchains in China, such as Wenchang Chain, Wuhan Chain and Ant Chain, etc., which are very different from the blockchain used overseas, Ethereum. Therefore, from From a technical perspective, Hong Kong is the preferred platform for enterprises to develop virtual assets. Hong Kong supports all 'chains'. If we 'link' some domestic digital assets to Hong Kong through some domestic 'chains', such as through Ant Chain, Then change the relevant underlying layer to Ethereum in Hong Kong and sell it to overseas companies. All problems, whether technical or legal, can be solved through Hong Kong as a bridge to connect some domestic companies. Business is connected as a product with overseas markets."

Whether HKVAX can support this bridge task deserves attention.

VDX

VDX, Victory Fintech Limited, is a joint venture company of Victory Securities, a local securities company in Hong Kong. The core strategy is positioned as a virtual asset trading platform focusing on 2B business.

Victory Securities, as the first Hong Kong local securities firm to obtain virtual asset licenses No. 1, 4 and 9 at the same time, has become one of the winners after the implementation of Hong Kong’s new virtual asset policy in 2023. On November 24, 2023, Victory Securities became the first local securities firm in Hong Kong approved to carry out virtual asset retail business. The current average monthly turnover reaches US$10 million, and its virtual asset business has achieved profitability.

VDX CEO comes from the traditional financial circle, with more than ten years of experience in high-frequency trading and 7 years of experience in the virtual asset industry; the COO has worked for Deutsche Bank and Accenture, and was previously an expert on virtual assets for the Hong Kong Securities Regulatory Commission. Many team members come from Tencent, Futu and Tiger Brokers.

Compared with other virtual asset trading platforms, VDX develops its business in a more entrepreneurial manner. VDX's business mainly focuses on providing Web3 technology and liquidity solutions to cooperative financial institutions, and developing an ecological layout in native Web3 industry funds.

Victory Securities has been killing everyone on the front line, and I believe VDX will make new moves in 2024.

BGE

Hong Kong BGE Limited is a wholly-owned subsidiary of HKE Holdings, a Hong Kong listed company. Lian Haomin, chairman of the board of directors of HKE Holding, is the founder of Monmonkey Group Holdings Limited ("Monmonkey Group"), the Monkey Group, and holds Hong Kong traditional financial licenses No. 1, 4 and 9.

Lian Haomin, born in 1992

After graduating from an American university and returning to Hong Kong in 2017, Lian Haomin worked and interned in institutions such as JP Morgan and China Taiping Group; Later, he discovered that the financial business in the family business was experiencing losses, so he asked his father to manage it himself. At that time, when giants such as Xiaomi, Meituan and Alibaba were going public in Hong Kong, Lian Haomin took charge of his family's Dasheng Group and successively invested in Hong Kong stock IPO projects and secondary market projects, making the company start to make profits. Until 2021, I stumbled on Evergrande RV Bao.

On January 8, 2024, according to Sing Tao Daily, Lian Haomin invested tens of millions of dollars in blockchain-related projects in the past three years. After completing the acquisition of HKE Holdings in 2021, the HKE virtual asset exchange team has exceeded 120 people. Its affiliated exchange,BGE, may officially obtain a virtual asset trading platform license from the China Securities Regulatory Commission as soon as the first quarter of this year. After obtaining the license, the business will be expanded to Southeast Asia according to the plan.

HKbitEX

HKbitEX is one of the four major business sectors of Tykhe Capital Group. Taiji Capital's core business includes digital asset trading, capital markets and wealth management, digital asset custody and technology research and development. On September 10, 2023, Taiji Capital launched the PRINCE token, which is Hong Kong's first real estate STO for "professional investors" and the first fund tokenized fundraising model approved by the Hong Kong Securities Regulatory Commission.

Founder and CEO Gao Han has worked at the Hong Kong Stock Exchange and participated in Southbound Trading and Bond Connect. The platform also has many former employees of the Hong Kong Stock Exchange joining the platform. , forming the regular army of the Hong Kong Stock Exchange.

HKbitEX founder Gao Han

In December 2023, HKbitEX signed a strategic cooperation with the Shanghai Technology Exchange. The Shanghai Technology Exchange is jointly established by the Ministry of Science and Technology and the Shanghai Municipal People's Government. According to the memorandum, Shanghai Technology Exchange will work with HKbitEX to explore financial solutions for scientific and technological enterprises based on asset tokenization, including problems such as mismatch between financing needs and capital supply, valuation difficulties, and imperfect investment exit mechanisms.

It is expected that in 2024, HKbitEX will make more attempts in RWA with more partners.

Meex

The launch of Meex is a typical example of a senior Web3 team settling in Hong Kong. On October 12, 2023, Meex Digital Securities Limited submitted an application for a virtual asset trading platform license to the Hong Kong Securities and Futures Commission.

Meex is supported by a Hong Kong consortium and focuses on asset security. Customer assets are independently managed in Meex Custody Services Limited, a TCSP licensed company. Currently applying for virtual asset No. 1, No. 7 and VASP licenses.

Jason FENG is appointed as the CEO of Meex. He previously served as the acting CEO of Kaisa. CTO Lu Zhichao was the technical director of Bybit. Vince Lam, the head of operations, once served as the head of operations of HKbitEX, an exchange that is also applying for a license. Other team members include people licensed by the Hong Kong Securities and Futures Commission and members of the legal profession.

Zhongan International, Huawei Cloud Hong Kong, etc. are now strategic partners of Meex. After the implementation of Hong Kong's new virtual asset trading platform licensing system, among the new batch of applicants, Meex took the lead the fastest. Whether it can gain more advantages remains to be seen.

PantherTrade

Panthertrade (Hong Kong) Limited, Chinese name Cheetah Trading (Hong Kong) Co., Ltd., submitted a virtual asset transaction on November 15, 2023 Platform application. According to people familiar with the matter, Cheetah Trading (Hong Kong) Co., Ltd. is a wholly-owned subsidiary of Futu Securities. It is another strong entry of traditional securities companies into the virtual asset market.

On March 7, 2023, Panthertrade submitted the corporate establishment form, and the first The director is Fang Xingzhi, who previously worked at JD Securities Co., Ltd. On September 14, 2023, PantherTrade appointed Chen Zhihu as a director. Chen Zhihu was the investment director of Huobi Asset Management (Hong Kong) Co., Ltd.; the other director is Hong Yimin.

As early as 2021, Futu Securities has begun to expand its layout in the encryption industry. In April 2021, on the Futu Niu Niu platform, a user asked Li Hua, CEO of Futu Securities, about whether Bitcoin can be traded on the platform in the future. Li Hua replied: "Hong Kong and overseas customers are very likely to be able to do so, but mainland customers should not be able to do so."

However, due to regulatory requirements at the time, trading in stocks such as GBTC and EHTE was forced to be suspended. Returning to the virtual asset market in Hong Kong this time, the regulatory environment is completely different. Whether Futu Securities has made sufficient preparations during the years of waiting will soon be answered.

OKX

Different from other competitors, the addition of OKX is more about sending two signals to everyone. First, the compliance of global virtual asset trading platforms has become a major trend; second, Hong Kong will surely be the center of global virtual asset market activities in the future.

In 2023, Binance and cz compromised with the US SEC and paid sky-high fines. The number one unicorn in the crypto industry chose to embrace regulation, which has proven that compliance is an irreversible fact for anyone. . For leading exchanges like OKX, choosing to complete compliance as soon as possible is undoubtedly the best choice.

On January 16, 2024, OKX Middle East Affiliates (OKX Middle East) was officially issued a Virtual Asset Service Provider (VASP) license by the Dubai Virtual Asset Regulatory Authority (VARA). The license will be OKX Middle East will officially take effect after meeting all remaining conditions and specific localization requirements listed in VARA. At that time, OKX Middle East will officially start operations after review and approval by regulatory agencies.

OKX has taken a steady pace in compliance, and it is only a matter of time before it arrives in Hong Kong. The market is paying attention to what impact OKX will have after it officially enters Hong Kong. Should we abide by the responsibilities of the exchange, or should we bravely innovate and launch more products to lead the reform of Hong Kong’s virtual asset market? Looking forward to OKX’s early response.

VAEX

Similar to OKX, the establishment and license application of VAEX are also measures taken by established crypto exchanges to embrace compliance.

VAEX became the 8th virtual asset trading platform license applicant on November 25, 2023. As early as February 2023, KuCoin announced technical support for VAEX through official channels. Now that VAEX has entered Hong Kong, in a sense, it is KuCoin’s move to embrace regulation.

KuCoin’s investment arm, KuCoin Ventures, is also active in Hong Kong. In March 2023, the company led a $10 million investment in CNHC, a Hong Kong stablecoin issuer.

Three months later, the platform confirmed it is tightening its compliance procedures by introducing mandatory KYC identity checks, amid an evolving regulatory environment in 2023. It can be predicted that if VAEX successfully lands in Hong Kong, it will have more linkage with KuCoin and help KuCoin gain a firm foothold.

Accumulus

The addition of Accumulus represents another trend:Domestic traditional Internet companies and traditional enterprises can also choose to use virtual assets and the Hong Kong market Achieve broader business expansion.

Cloud Account Technology (Tianjin) Co., Ltd., one of the top 500 Chinese enterprises, has been approved for an overseas investment quota of more than HK$1.1 billion and registered Cloud Account Greater Bay Area Technology (Hong Kong) Co., Ltd. in Hong Kong. The company is Accumulus GBA Technology (Hongkong) Co., Limited. On December 6, 2023, a virtual asset trading platform license application was officially submitted to the Hong Kong Securities and Futures Commission.

Cloud account has provided flexible employment services for 7 years and is now China's largest online One of the human resources service companies. It has provided flexible employment services to more than 82 million freelancers in 120 countries and regions around the world, with revenue exceeding HK$110 billion in 2022.

Chairman Yang Hui serves as a member of the National Committee of the Chinese People's Political Consultative Conference , a member of the Standing Committee of the All-China Federation of Industry and Commerce, a member of the Standing Committee of the 14th Tianjin Municipal People's Political Consultative Conference, vice chairman of the Tianjin Federation of Industry and Commerce, and a member of the Standing Committee of the Tianjin Municipal Committee of Democratic National Construction Association. , Vice President of Tianjin Chamber of Commerce, member of the Standing Committee of Tianjin Binhai New Area People’s Congress, and member of China Democratic National Construction Association.

Among all the applicants for the virtual asset trading platform, the Accumulus team has the most special background. Relying on mainland resources has special advantages in the transportation of funds and talents. If it focuses on security for long-term construction, Accumulus may reap results; but on the other hand, mainland China, which has long been isolated from the global virtual asset market, is technically and cognitively There are obvious differences with the global market, and it is still unclear whether the platform and business can gain market recognition.

But no matter what, I hope that Accumulus can successfully take root in Hong Kong, which may provide a strong boost to the development of the Web3 field in mainland China.

DFX Labs

DFX Labs Company Limited became the last applicant for a Hong Kong virtual asset trading platform license in December 2023. The application was submitted on the 27th.

Simon, COO of DFX Labs Au Yeung, a graduate of the Wharton School. Previously, he served as CEO of Blockchain Finance and BGE. After leaving BGE, he founded IEEE as a co-founder and joined DFX Labs in September 2023.

The DFX official website is in trial operation and will support BTC and ETH transactions.

HKVAEX

HKVAEX was established in December 2022 and launched a virtual asset trading platform in 2023.

Stanley Fung serves as CEO of HKVAEX. Stanley Fung graduated from the University of Toronto. Before joining HKVAEX, heserved as the business leader of Xinhuo Technology Exchange and the CEO of Huobi Hong Kong.

Previously, the Hong Kong media South China Morning Post pointed out that there is a lot of evidence that HKVAEX was established by Binance for its layout in Hong Kong. But afterwards, Binance denied the news, saying that "HKVAEX" does not belong to any company under Binance.

In June 2023, HKVAEX participated in supporting the "Virtual Asset Index" and "Virtual Asset Exchange Rating" launched by HKVAC, providing third-party reference data for professional investors and the public when participating in market activities. In addition, the HKVAEX team actively participates in various exchange activities for virtual assets in Hong Kong, including InvestHK, Tencent Cloud, Cyberport Conference, etc.

It remains to be seen whether the senior Web3 background and active market participation can help HKVAEX take root.

BitHarbour

The last applicant applied on January 11, 2024. BitHarbour (Hong Kong) Limited, the Chinese name is Bifenggang (Hong Kong) Co., Ltd., and the trading platform name is BitHarbour. BitHarbour is also the applicant with the least publicly disclosed information.

However, in the BitHarbour service agreement, one of the items states that users need to " Agree that all investment operations conducted on CoinEx represent true investment intentions and unconditionally accept the potential risks and benefits of investment decisions." It is speculated that there is some kind of business connection between BitHarbour and CoinEx.

Conclusion

Generally speaking, Hong Kong virtual asset trading platforms can be divided into three major categories: experienced Web3 companies, traditional financial institutions, and committed Web3 Innovative entrepreneurs. Senior Web3 companies have obvious advantages, with rich experience and market knowledge; traditional financial institutions are better because of their huge potential capital and customer base; and entrepreneurs may still have many challenges to face.

We cannot predict who will win in the end. But no matter who the winner is, the fierce competition among virtual asset trading platforms has shown that:The future of the virtual asset market cannot be separated from Hong Kong.