Hong Kong's Securities and Futures Commission (SFC) has recently granted licenses to four new virtual asset trading platforms (VATPs), expanding the city’s regulated crypto exchange ecosystem. This development is part of Hong Kong’s broader strategy to enhance its regulatory framework and establish itself as a leading hub for Web3 innovation.
Overview of the Newly Licensed Virtual Asset Trading Platforms
The SFC’s latest approvals bring the total number of licensed VATPs in Hong Kong to seven. These platforms are expected to operate under strict regulatory guidelines, offering services such as spot trading and over-the-counter (OTC) transactions to professional investors.
HKbitEX: Founded by Former HKEX Executives
HKbitEX is operated by Hong Kong Digital Asset Exchange Group Limited. Established in 2019, the platform focuses on providing compliant digital asset trading services. The parent company, Tai Chi Capital Group, offers tokenized asset services spanning capital markets, wealth management, and Web3 technology development.
Notably, Tai Chi Capital launched Hong Kong’s first real estate fund security token offering (STO) in September 2023. The founder, Gao Han, previously held a leadership role at the Hong Kong Exchanges and Clearing Limited (HKEX). HKbitEX has secured multiple funding rounds, including a $10 million Series A2 in 2020 and a $9 million Pre-B round in 2021.
Accumulus: Backed by a Top Chinese Enterprise
Accumulus is launched by Cloud Account Greater Bay Area Technology (Hong Kong) Limited. The platform began operations in April 2023 and applied for a VATP license by the end of the same year. Cloud Account Hong Kong is the overseas headquarters of its parent, which is recognized as one of China’s Top 500 Enterprises. The group serves over 110 million freelancers globally and reported revenue of approximately $150 billion in 2024.
DFX Labs: Led by Blockchain Industry Veterans
DFX Labs Company Limited applied for its VATP license in late 2023. The team includes professionals with extensive experience in blockchain and fintech. For example, the COO, Simon Au Yeung, previously served as CEO of Blockchain Finance and BGE, and was the co-chair of IEEE in Hong Kong. The CTO, David H., has worked with major firms like Morgan Stanley and HashKey Group.
EX.IO: Supported by a Well-Known Internet Brokerage
EX.IO, operated by Thousand Whales Technology (BVI) Limited, is the only licensed VATP with a securities brokerage background. Its major investor is a prominent internet brokerage firm under Sina Group. Other investors include Longling Capital and WeShare Group. Originally named xWhale, the platform was established following a strategic agreement between BusyWhale and a securities brokerage in mid-2023.
Hong Kong’s Regulatory Roadmap for Virtual Asset Licensing
The SFC has introduced a clear six-step licensing roadmap to improve the efficiency and transparency of the approval process. This structured approach aims to address previous challenges, including application withdrawals during the transition period.
Six-Step Licensing Process
- On-site Inspection: The SFC conducts inspections and provides feedback, requiring platforms to submit corrective action plans.
- Conditional Licensing: After agreeing on a corrective plan, the SFC issues a conditional license. The platform must complete all corrective measures and pass penetration tests and vulnerability assessments before operating within a restricted scope.
- Independent Testing: Penetration tests and vulnerability assessments must be performed by an independent third party. Platform management must ensure critical corrective actions are continuously implemented.
- Restricted Operation: Upon completing corrective measures and passing required tests, the platform can begin limited operations.
- External Assessment: Platforms must hire external experts to evaluate revised policies and procedures. The SFC supervises this phase to clarify regulatory expectations and provide feedback.
- Full Licensing: After successful completion of the external assessment, the SFC removes operational restrictions, granting a full license.
Future Developments and Industry Engagement
The SFC plans to establish a formal consultation group in early 2025, comprising senior representatives from all licensed platforms. This initiative aims to foster dialogue, address investor protection concerns, and systematically prioritize regulatory developments. Additionally, the SFC will issue further guidance for new corporate applicants seeking to operate VATPs in Hong Kong.
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Frequently Asked Questions
What is a Virtual Asset Trading Platform (VATP)?
A VATP is a regulated exchange that allows users to trade virtual assets like cryptocurrencies. In Hong Kong, VATPs must be licensed by the SFC and comply with strict operational and security standards.
How does the SFC’s licensing process work?
The process involves six key steps: on-site inspection, conditional licensing, independent testing, restricted operation, external assessment, and full licensing. This ensures platforms meet all regulatory requirements before offering full services.
Who can use these licensed platforms?
Currently, these platforms cater primarily to professional investors. However, regulatory developments may expand access to retail investors in the future, subject to compliance safeguards.
What are the benefits of using a licensed VATP?
Licensed platforms offer enhanced security, regulatory oversight, and investor protection measures. They adhere to strict standards for fund segregation, cybersecurity, and operational transparency.
How does Hong Kong’s approach compare to other jurisdictions?
Hong Kong aims to balance innovation with investor protection by implementing a clear regulatory framework. This contrasts with some regions where regulations are less defined or more restrictive.
Will more platforms be licensed in the future?
Yes, the SFC continues to review applications and expects to license additional platforms following the established roadmap and guidelines.