- Hong Kong Licensed Crypto Exchanges Are Only Allowed For Service Professionals
- Virtual assets are complex products likely not understood by retail investors, regulator says
A partnership between two digital asset brokers offers a new avenue for professional Hong Kong investors to get into crypto-assets.
OSL, a digital asset platform regulated by the Securities and Futures Commission (SFC), has agreed to provide Interactive Brokers with a platform to offer virtual asset services to its professional clients, according to an announcement Thursday.
At the end of 2020, OSL became the first company to receive approval from the Hong Kong regulator to provide a digital asset trading platform to institutions. He managed to obtain a license after undergoing verification requirements. Interactive Brokers’ partnership with the exchange highlights its weight in the market.
“Investors around the world are rallying to digital asset markets, and the collaboration with OSL comes at a key time in the development of Hong Kong’s regulated digital asset ecosystem,” said David Friesland, Head of Asia- Pacific at Interactive Brokers, in a statement.
In January this year, the Hong Kong Monetary Authority said only financial institutions licensed by the SFC would be allowed to operate. In an advisory, the regulator said virtual assets should be viewed as complex products that are unlikely to be understood by retail investors. And so, they must be reserved for professionals.
“Hong Kong has one of the highest concentrations of institutional and professional investors in the world, as well as a clear regulatory regime regarding digital assets,” OSL chief executive Wayne Trench said in a statement.
Hong Kong was a home for some of today’s best-known blockchain and crypto companies, including Crypto.com, BitMEX, and Bitfinex. The popular stablecoin Tether was also launched in 2014. But strict regulations, including the rule that limits services to professional investors, have led some companies to look to other markets.
The SFC recently took aim at non-fungible tokens, warning that if investors “cannot understand and bear the potential losses, they should not invest in NFTs”. China’s cryptocurrency warnings have also clouded Hong Kong’s role as a fintech innovation hub.
Many crypto exchanges have applied to the Hong Kong license agreement, but OSL has been the only one to have succeeded so far.