The Asian-based cryptocurrency firm, OSL Digital Securities, won the Hong Kong market regulator’s in-principle decision to issue an exchange platform license to operate its crypto-related business in the region.
With this crucial development, the Fidelity-backed BC group is now one step closer to operating as a regulated provider for brokerage and automated trading services, including security tokens. After the latest move, OSL asserted that it would continue to work under the SFC’s regime in a bid to secure a full-provider license in Hong Kong.
Commenting on the authorization, BC Group CEO Hugh Madden stated,
“Securing approval-in-principle for a virtual asset trading platform license in Hong Kong, inclusive of security tokens, underscores our commitment to comprehensively addressing the demands of institutional investors”
In response to growing anti-money-laundering [AML] and know-your-customer [KYC] concerns, Hong Kong’s Securities and Futures Commission expanded its regulatory oversight for cryptocurrency exchange treating them as traditional securities brokerages and allowed these platforms to opt into regulation under its new rules.
Essentially, the “in-principle” decision is the first step of the full authorization process in which the applicant platform is required to satisfy one or more requirements set by the Securities and Futures Commission [SFC] in order to obtain a license.
SFC had unveiled its new set of rules for the cryptocurrency exchanges in November last year. It details how the Platforms must address custody and compliance, in particular with regard to the KYC and AML rules. The published documents also state that exchanges can only offer products to “professional investors.” In addition, they will also be required to file a monthly report to the Commission.
The 61-paged document stated,
“The adoption of the new regulatory framework will enable the SFC to formulate its future
regulatory strategy for virtual assets through close supervisory interactions with an
evolving and dynamic industry.”
The exchanges will need the regulator’s approval for offering new products. Besides, SFC does not consider direct peer-to-peer platforms for licensing. Interestingly, OSL was the first and the only platform to apply for the license.