HashKey Exchange received the first license under Hong Kong’s new crypto regulations, enabling retail token trading in the city as officials work to develop a global center for the digital asset industry.
According to a statement released by the company on Thursday, HashKey will be able to “expand its business scope from serving professional investors to retail users” as a result of an upgrade to its current licenses. The Securities and Futures Commission has not yet confirmed the notification.
To rebuild its reputation as a cutting-edge financial hub, Hong Kong began a required crypto framework in June. The change in direction generated a lot of interest and contrasted with a US crackdown on digital assets, but the city hasn’t yet attracted significant investments from an industry that was chastened by a market crash last year.
The exchange said that, to acquire this crypto trading license, it has teamed up with Standard Chartered Plc to offer services for depositing and withdrawing fiat currencies. The company also declared the opening of its over-the-counter trading facility for virtual assets.
The other crypto exchange having a license under Hong Kong’s previous voluntary licensing model was HashKey’s rival OSL.
HashKey Group conducts business in a variety of sectors, including trading and asset management. In May this year, the company was in preliminary discussions to fund $100 million to $200 million at a more than $1 billion valuation.
According to Hong Kong’s new regulations, a crypto exchange is permitted to provide trading to both individuals and institutions if it obtains and abides by licence designed to limit the dangerous business practices exposed by the crash of 2022 and the failure of the FTX platform.
Larger coins like Bitcoin and Ether that appear in at least two well-known, investable indices are the only ones available to retail investors. Risk evaluations, insurance coverage, and asset custody requirements could raise the cost of operating the exchanges.
Following a $1.8 trillion decline in token prices from a 2021 peak and thousands of job losses, cryptocurrency businesses are moving cautiously forward with fresh investments.
15 significant digital asset companies, including important exchanges that accounted for the vast majority of crypto trading volumes, declined to elaborate on specific investment intentions for Hong Kong in a Bloomberg News survey conducted in May.
The SFC has also received a large number of queries, and cryptocurrency companies like Huobi, OKX, and Amber Group have announced they want to seek for licenses. Hong Kong provides access to Chinese riches in addition to a local market, especially if Beijing ever relaxes the restrictions on cryptocurrency trading on the mainland.
As the region’s regulations become clearer, the digital asset market increasingly looks to Asia for growth potential. The nations of Hong Kong, Japan, Singapore, and South Korea are among those attempting to attract cryptocurrency enterprises.
They are up against rivals like the European Union and Dubai. While everything is happening, the US is engulfed in a crypto fog brought on by conflicting court rulings, a power struggle among regulatory organizations, and disagreements over the proposed law.
On the mainland, it is unlawful to transact in cryptocurrencies, and Beijing has forbidden foreign exchanges from providing online services to domestic customers. However, cryptocurrency trading is permitted in Hong Kong, which aspires to become a center for the exchange of digital assets.
Brick-and-mortar cryptocurrency stores with lax regulations are common in the city’s tourist and shopping areas.
The stores are prospering thanks to booming demand from mainland China travelers and uncertainty around their regulatory status.
Their key selling point is that they make it simple for users to buy digital assets with cash, frequently without revealing the source of the funds or the customer’s identity.
These over-the-counter crypto businesses let users to buy big volumes of cryptocurrency with lighter, or sometimes zero, checks, in contrast to the stringent licensing requirements devised for online exchanges in the city’s effort to become a virtual assets trading centre.
Hong Kong is attempting to promote the growth of cryptocurrency, in contrast to other nations like the US and Singapore, which are cracking down on it in the wake of the failure of FTX and other well-known exchanges.