Cryptocurrency exchange OKX to apply for virtual asset licence in Hong Kong as city overhauls regulations

OKX said in a statement on Tuesday that it is applying for the licence in Hong Kong just two months before the city will officially make crypto trading fully legal
Many in the crypto industry left Hong Kong in recent years after the city introduced a voluntary licensing regime that limited retail participation

Bitcoin

Che Panin Beijing

Published: 6:30pm, 28 Mar 2023

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Cryptocurrency exchange OKX said it plans to apply for a virtual assets trading licence in the city, in the latest sign of Hong Kong’s growing attractiveness as a global virtual asset hub as US regulators probe Binance and Huobi’s Justin Sun.

OKX, which claims to be the world’s second-largest crypto exchange by trading volume, said in a statement on Tuesday that it is applying for the licence in Hong Kong just two months before the city will officially make crypto trading fully legal.

Hong Kong’s plan to woo cryptocurrency exchanges has made it an oasis at a time when the global crypto investment community is still reeling from the collapse of FTX, as well as a sharpened regulatory stance in the US.

Lennix Lai, the firm’s managing director of global institutional, said during a media briefing in Hong Kong on Tuesday that OKX sees “immense potential” in the city and is willing to invest in talent and work with regulators “over the next five years to continue building the local ecosystem”.

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OKX said it has been preparing for more than a year to meet Hong Kong’s new regulatory requirements governing cryptocurrency exchanges that will come into effect in June this year.

The exchange will set up two entities, one called OKX Hong Kong Fintech Company Limited to apply for licences to operate a brokerage and exchange, and another, called OKX Hong Kong Custody Company Limited, to apply for a trust and company service provider (TCSP) licence for holding assets.

Under the new regulations, which were introduced after the government announced plans last October to turn the city into a virtual asset hub, crypto trading platforms will need a licence to provide trading services to Hong Kong residents.

Hong Kong’s regulatory overhaul is drawing attention, partly because it aims to offer clarity on the governance of cryptocurrencies amid an environment where they have been attracting increasing scrutiny from regulatory bodies around the world in the wake of last year’s market rout and the collapse of FTX, once the world’s second-largest crypto exchange, amid allegations of fraud.

Many in the crypto industry left Hong Kong in recent years after the city introduced a voluntary licensing regime that limited retail participation. Unlicensed exchanges, including OKX, could still serve customers in the city, but companies started moving to markets, like Singapore, seen as having more favourable industry regulations.

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On Monday, the US Commodity Futures Trading Commission filed a lawsuit against crypto exchange Binance and its founder Zhao Changpeng, alleging that the company offered unregistered crypto derivative products in the US, which is against federal law.

Separately, last week the US Securities and Exchange Commission charged Chinese cryptocurrency entrepreneur Justin Sun with fraud, and accused eight celebrities including actress Lindsay Lohan and rapper Soulja Boy with illegally promoting his crypto assets. Sun is seen as the public face of Huobi, one of the world’s largest cryptocurrency exchanges.

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