Hong Kong’s new crypto regime awards first exchange licence to HashKey
HONG KONG – The first licence under Hong Kong’s new crypto regime has gone to HashKey Exchange, legalising the retail trading of tokens in the city as officials seek to foster a global hub for the digital asset sector.
Hashkey has become the city’s first licensed trading platform with the upgrading of its existing licences, and will now be able to offer services to retail investors, the company said in a statement on Thursday. The Securities and Futures Commission (SFC) has yet to issue a statement.
Hong Kong started a mandatory crypto framework in June, part of an effort to restore its image as a cutting-edge financial centre. The pivot stirred substantial interest and contrasts with a digital asset clampdown in the United States, but the city has yet to win big investments from an industry chastened by a market rout in 2022.
HashKey and rival OSL were the only two crypto exchanges with permits under Hong Kong’s earlier voluntary licensing programme.
HashKey Group operates in areas ranging from venture funding to asset management and trading. The firm was in early-stage talks to raise US$100 million to US$200 million (S$134.4 million to S$268.8 million) at a valuation above US$1 billion, Bloomberg News reported in May.
Under Hong Kong’s new rules, crypto exchanges can offer trading to individuals and institutions if they secure and comply with licences intended to curb the risky practices exposed by the 2022 crash and the collapse of the FTX platform.
Retail investors are restricted to larger coins like Bitcoin and Ether that feature in at least two acceptable, investible indexes. Requirements for risk assessments, insurance cover and asset custody could add to operating costs.
Crypto businesses are proceeding cautiously with new investments after a US$1.8 trillion slump in token prices from a 2021 peak and thousands of job losses.
In a Bloomberg survey in May, 15 major digital asset outfits – including key exchanges that accounted for the vast bulk of crypto trading volumes – refrained from elaborating on specific investment plans for Hong Kong.
At the same time, the SFC has received dozens of inquiries and crypto firms such as Huobi, OKX and Amber Group have said they plan to apply for licences. Hong Kong offers not just a local market but also a conduit to Chinese wealth, particularly if Beijing ever loosens a ban on crypto trading on the mainland.
The digital asset industry is increasingly turning to Asia for growth opportunities as the region clarifies regulations. Hong Kong, Japan, Singapore and South Korea are among the jurisdictions seeking to woo crypto businesses.
They face competition from the likes of Dubai and the European Union. The US, meanwhile, is mired in a crypto fog caused by contradictory court judgments, a turf war between regulatory agencies and disputes about proposed legislation. BLOOMBERG