- Hong Kong licensed cryptocurrency exchanges are only allowed for service professionals
- Virtual assets are complex products that are likely not understood by retail investors, the regulator says
A partnership between two digital asset brokerage firms allows Hong Kong professional investors to dabble in cryptocurrencies.
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 a announcement on Thursday.
At the end of 2020, OSL became the first company to receive permission by the Hong Kong regulator to provide a digital asset exchange platform for institutions. He managed to get the license after undergoing the inspection requirements. Interactive Brokers’ partnership with the exchange highlights its weight in the market.
“Investors around the world are moving closer to digital asset markets, and the partnership with OSL comes at a key moment in the development of Hong Kong’s regulated digital asset ecosystem,” David Friesland, head of Hong Kong, said in a statement. Asia Pacifica at Interactive Brokers.
In January of this year, the Hong Kong Monetary Authority stated that only SFC licensed financial institutions will be able to conduct the business. In a I notify, the regulator said virtual assets should be viewed as complex products that are unlikely to be understood by retail investors. And therefore, they must be limited to professionals.
“Hong Kong has one of the highest concentrations in the world of institutional and professional investors, as well as a clear regulatory regime on digital assets,” Wayne Trench, chief executive of OSL, said in a statement.
Hong Kong has been a hotbed for some of today’s most popular blockchain and crypto businesses, including Crypto.com, BitMEX, and Bitfinex. The popular stablecoin Tether was too launched there in 2014. But strict regulations, including the rule restricting services to professional investors, have led some companies to jump to other markets.
The SFC recently targeted non-fungible tokens, warning that if investors “can’t fully understand them and bear the potential losses, they shouldn’t invest in NFTs.” China’s warnings about cryptocurrencies have also confused Hong Kong’s role as a hub for fintech innovations.
Many cryptocurrency exchanges have applied for the Hong Kong licensing agreement, but OSL has been the only successful one so far.