Hong Kong regulator gives in-principle approval to license crypto exchange firm

HONG KONG • Hong Kong's markets regulator has agreed in principle to issue a licence to cryptocurrency firm OSL Digital Securities, a unit of Fidelity-backed BC group, the firm said in an exchange filing last Friday.

OSL said last November that it had become the first firm to apply for a digital asset licence from Hong Kong's Securities and Futures Commission under new rules allowing crypto exchanges to opt into regulation.

No other firm has so far said it has received such approval. Financial regulators worldwide have been debating whether and how they should regulate the cryptocurrency, or virtual asset, industry.

OSL, and some of its competitors, say they welcome regulation in order to make it easier to provide services to financial institutions wishing to trade cryptocurrencies.

BC Group chief executive Hugh Madden said that one benefit of being licensed was that regulated institutions would be able to reduce their risk by being able to engage with other regulated entities.

BC Group provides business park and advertising services alongside its cryptocurrency business, which accounts for the bulk of its revenues. It made a net loss of 90.8 million yuan (S$18 million) in the first half of this year. Final approval is subject to certain conditions, the filing said, without identifying them.

Mr Madden said that these were "as you'd expect from a conservative regulator in a financial hub".

Other Asian regulators are also looking to regulate cryptocurrency firms. Singapore is in the process of bringing in licensing for digital asset firms. Some exchanges chose to apply for licences in the Republic rather than Hong Kong as the rules are less prescriptive.

Japan's Financial Services Agency already licenses some cryptocurrency exchanges.

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 24, 2020, with the headline 'Hong Kong regulator gives in-principle approval to license crypto exchange firm'. Print Edition | Subscribe