Hong Kong has emerged as a significant hub for virtual asset trading, with its Securities and Futures Commission (SFC) implementing a mandatory licensing regime. Since June 1, 2023, all virtual asset trading platforms operating in Hong Kong or actively marketing to Hong Kong investors must be licensed by the SFC. This move aims to provide a secure and regulated environment for investors while leveraging Hong Kong's strategic position as a gateway to mainland China and broader Asian markets.
Several key players have emerged in this new regulatory landscape, ranging from early entrants to new applicants. This article provides an overview of the current status of Hong Kong's licensed virtual asset exchanges.
OSL Digital Securities: Pioneering Licensed Platform
OSL Digital Securities Limited made history as Hong Kong's first licensed virtual asset exchange. On August 3, 2023, BC Technology Group, OSL's parent company, announced that its subsidiary had received SFC approval to expand its existing license to serve retail investors.
Having initially secured Type 1 (dealing in securities) and Type 7 (providing automated trading services) licenses back in 2020, OSL established itself as Hong Kong's first publicly-listed, licensed digital asset platform with insured assets and auditing by a Big Four accounting firm.
The company has leveraged its first-mover advantage to establish significant partnerships with traditional financial institutions including DBS Bank and Standard Chartered. Singapore's sovereign wealth fund GIC further validated OSL's position with a HK$543 million investment.
OSL continues to focus on building a concentrated portfolio targeting unique growth opportunities in the blockchain and Web3 sectors, with particular emphasis on private equity and venture investments.
Hashkey Exchange: Retail Trading Approval
Hashkey Exchange received another landmark approval on August 3, 2023, when the SFC authorized the platform to offer retail trading services for major cryptocurrencies including Bitcoin and Ethereum. The exchange officially launched its retail services on August 28, 2023.
The platform had previously obtained Type 1 and Type 7 licenses in 2022. Hashkey Exchange now offers both USD and HKD deposit/withdrawal options, with global recognized institutional accounts able to transfer directly to the exchange's fiat wallets.
Security remains a cornerstone of Hashkey's approach, with client funds held separately from operational accounts and protected by institutional-grade custody insurance. The exchange has also obtained ISO 27001 (information security) and ISO 27701 (data privacy) certifications, further strengthening its compliance credentials.
Emerging Applicants in the Licensing Pipeline
Beyond the two licensed platforms, four companies have submitted applications to join Hong Kong's regulated virtual asset exchange ecosystem.
HKVAX: Security Token Focus
Hong Kong Virtual Asset Exchange (HKVAX) received principle approval from the SFC on August 11, 2023, positioning it to become Hong Kong's third licensed virtual asset trading platform. The exchange aims to establish new standards for digital asset trading while creating bridges between traditional and digital finance.
HKVAX has partnered with Magic Circle, a digital securities STO solutions provider, since April 2021. This collaboration focuses on promoting security token offerings (STOs) in Hong Kong and broader Asian markets.
The exchange plans to offer three core services: OTC brokerage with narrow spreads and high liquidity, institutional-grade trading platforms, and fully secured custody services with clear separation between client and company assets.
HKbitEX: Traditional Finance Expertise
Backed by Tai Chi Capital, HKbitEX was established on June 8, 2020, with several former Hong Kong Exchange executives joining its ranks. The company was among the first to apply for a virtual asset trading platform license from the SFC.
Headquartered in Hong Kong, HKbitEX primarily serves professional investors with spot and OTC digital asset trading services. The company obtained a Trust and Company Service Provider license (TCSP) in April 2020.
Similar to HKVAX, HKbitEX announced a partnership with Magic Circle in February 2023 to expand the adoption of security token offerings in Hong Kong.
HongKong BGE Limited: Corporate Background
HK BGE operates as a wholly-owned subsidiary of listed company HKE Holdings (01726). The company initially appointed Thor Chan as CEO, who previously served as CEO and co-founder of the now-defunct AAX exchange.
HKE Holdings maintains a market capitalization of approximately HK$2.3 billion. Company chairman and major shareholder Lian Haomin is reportedly the son of alleged "high seas gambling king" Lian Zhuozhao, though this connection remains unconfirmed.
Currently, HK BGE's website remains accessible only to invited professional investors, with two directors overseeing operations and business development.
Victory Securities: Traditional Firm Embracing Digital Assets
Victory Securities has actively expanded into virtual asset investments in recent years, securing multiple SFC licenses including Type 1 (virtual asset trading), Type 4 (virtual asset advisory services), and Type 9 (virtual asset management services).
As the first financial group to simultaneously receive SFC licensing for virtual asset trading and advisory services, Victory Securities began offering virtual asset trading services in March 2023. The company was included in the SFC's newly published list of virtual asset trading platform applicants on September 25, 2023.
Currently, Victory Securities restricts virtual asset investment services (excluding virtual asset ETFs) to professional investors only. Prospective clients must complete a professional investor assessment and provide proof of assets exceeding HK$8 million from the previous year through bank statements, securities statements, or trust certifications.
Prospective Entrants and Market Developments
The Hong Kong virtual asset exchange landscape continues to evolve with several major global players indicating interest in entering the market.
OKX: Preparing for Hong Kong Entry
Global exchange OKX began preparing for its Hong Kong expansion in 2022, initiating the virtual asset exchange license application process. By June 2023, the company revealed it had reached the final stages of its VASP license application, anticipating approval between March and June 2024.
On September 25, 2023, OKX Chinese official Twitter account announced that OKX HK planned to formally submit its Hong Kong VASP license application before the end of October. The exchange has maintained steady growth in Chinese-speaking markets despite broader market conditions, focusing on product refinement and ecosystem development.
As Hong Kong's regulatory framework continues to develop, market observers anticipate potential institutional partnerships and retail-friendly financial product offerings from OKX in the Hong Kong market. 👉 Explore more trading strategies
HTX (Formerly Huobi): Uncertain Prospects
On May 26, 2023, cryptocurrency exchange HTX (formerly Huobi) announced the launch of Huobi HK, positioned to embrace Hong Kong's new cryptocurrency policies. The platform intended to offer Hong Kong users trading services for major cryptocurrencies including BTC, ETH, TRX, and HT.
During a June 3, 2023 interview with CoinDesk, Justin Sun, Tron founder and HTX global advisor, revealed that Huobi HK had submitted its VASP license application, which included an 18-month "grace period" during which the SFC could approve or reject the application.
Despite Sun's expressed confidence, industry sources suggest HTX may face challenges in the licensing process, with reports indicating the exchange had been placed on the SFC's watchlist. Whether HTX will ultimately secure a license remains uncertain as Hong Kong continues to refine its regulatory approach to virtual asset exchanges.
Frequently Asked Questions
What is the licensing requirement for virtual asset exchanges in Hong Kong?
Since June 1, 2023, all virtual asset trading platforms operating in Hong Kong or actively marketing to Hong Kong investors must obtain a license from the Securities and Futures Commission. This mandatory licensing regime aims to create a secure environment for digital asset investors while maintaining market integrity.
Which companies currently hold virtual asset exchange licenses in Hong Kong?
As of now, OSL Digital Securities Limited and Hashkey Exchange are the only two fully licensed virtual asset trading platforms in Hong Kong. Both obtained Type 1 and Type 7 licenses and have received approval to serve retail investors with major cryptocurrencies.
What types of investors can access licensed virtual asset exchanges in Hong Kong?
Licensing requirements vary by platform. While some exchanges like Hashkey and OSL serve retail investors, others including Victory Securities currently restrict services to professional investors only, typically requiring proof of significant assets exceeding HK$8 million.
How does Hong Kong's approach to virtual asset regulation differ from other jurisdictions?
Hong Kong has implemented a comprehensive licensing framework that requires exchanges to meet strict operational, security, and financial standards. This approach aims to balance innovation with investor protection, positioning Hong Kong as a regulated hub for digital asset trading in Asia.
What security measures do licensed exchanges implement?
Licensed exchanges typically employ multiple security measures including segregated client accounts, institutional-grade custody solutions, insurance protection for digital assets, and compliance with international standards such as ISO 27001 for information security and ISO 27701 for data privacy.
Are global exchanges eligible to apply for Hong Kong licenses?
Yes, global exchanges can apply for Hong Kong virtual asset trading licenses provided they establish local entities compliant with SFC requirements and meet all regulatory standards. Several major international exchanges have indicated plans to enter the Hong Kong market through this licensing process.
The development of Hong Kong's licensed virtual asset exchange ecosystem represents a significant step toward regulated digital asset trading in Asia. As more platforms navigate the licensing process and enter the market, investors will benefit from increased choice within a framework designed to prioritize security and compliance. 👉 View real-time market tools