Against the backdrop of the booming global digital currency market, Hong Kong is about to usher in a milestone move - issuing the first digital asset exchange license. This news will undoubtedly set off a global uproar and inject new vitality and development momentum into the digital currency industry. Let us explore this major event in depth and reveal its far-reaching impact on Hong Kong's financial market and the global digital asset field.

The rise of the digital currency industry

Since its birth, digital currency has always attracted much attention. Its decentralization, high security, and convenient trading have attracted the attention of many investors. Globally, more and more institutions and individuals have begun to get involved in the field of digital currency investment, which has promoted the booming digital currency market. Against this background, as an international financial center, Hong Kong's issuance of a digital asset exchange license will undoubtedly further consolidate its position in the global digital asset field.

The significance of Hong Kong's digital asset exchange license

As an Asian financial center, Hong Kong has always had rich experience and resources in the financial field. The issuance of a digital asset exchange license will facilitate Hong Kong to attract more digital asset trading platforms to settle in, and promote the standardization and healthy development of the digital currency market. This move will not only enhance the international competitiveness of Hong Kong's financial market, but also provide investors with a safer and more transparent trading environment, and promote the development of the digital currency industry.

Influencing the trend of the global digital asset market

With Hong Kong about to issue a digital asset exchange license, the global digital asset market will usher in new development opportunities. As an international financial center, changes in Hong Kong's policies and regulations often have a profound impact on the global financial market. The development momentum of the digital currency industry is unstoppable, and Hong Kong's measures will provide reference for other countries and regions around the world and promote the comprehensive development of the digital asset market. This move will also bring more investment opportunities to global digital currency investors and promote the global development of the digital currency market.

Looking to the future

With the issuance of Hong Kong's first digital asset exchange license, the digital currency industry will usher in new development opportunities and challenges. As an international financial center, Hong Kong will play a more important role in the field of digital currency and inject new vitality into the development of the global digital asset market. We look forward to seeing that as the digital currency industry continues to grow and develop, Hong Kong will play an increasingly important role in the global digital asset market, bring more investment opportunities to global digital currency investors, and promote the healthy development of the digital currency industry.

Against the backdrop of the booming digital currency industry, the issuance of Hong Kong's first digital asset exchange license is undoubtedly an important milestone event. This move will bring new development opportunities to Hong Kong's financial market and drive the digital currency industry forward. Let us wait and see, and look forward to the booming development of the digital currency industry in Hong Kong, injecting new vitality into the global digital asset market.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Recently, the Hong Kong Securities and Futures Commission approved in principle the application of OSL, a subsidiary of BC Technology Group, for a virtual asset trading platform license. If the Hong Kong Securities and Futures Commission completes the final approval of the license, it means that the first licensed virtual asset trading platform in Asia will be born in Hong Kong, China. Hong Kong, China has always been positive about digital assets and is at the forefront of many Asian countries and regions. This move undoubtedly consolidates Hong Kong's position in the international capital market. After the birth of the first licensed virtual asset trading platform in Hong Kong, China, it will have a huge impact on the future development of the entire Asian digital economy.

Licensing rules for operators of digital asset trading platforms in Hong Kong

At present, the application for a license for a Hong Kong digital asset trading platform still needs to be carried out in accordance with the "Position Paper: Regulating Virtual Asset Trading Platforms" and its appendix "Licensing Conditions and Terms and Conditions Applicable to Virtual Asset Trading Platform Operators" issued by the Hong Kong Securities and Futures Commission on November 6, 2019. The following will interpret the regulatory framework of the "Position Paper" and the "New Regulations".

Regulatory objects:

The "New Regulations" clearly state that the operator applying for a license is a central virtual asset trading platform that operates in Hong Kong and buys and sells virtual assets including at least one security token. The New Regulations make it clear that Bitcoin and other common cryptocurrencies are not securities, and Bitcoin is not regulated. Only platforms that trade security tokens are regulated.

Platforms that only buy and sell non-security virtual assets or tokens are not licensed or regulated. Because such assets do not belong to "securities" or "futures contracts" under the Securities and Futures Ordinance, only platforms that provide security-type virtual assets or token trading services to customers fall within the scope of the SFC's supervision.

Supervision method:

The New Regulations indicate that by including security-type virtual assets or tokens in the scope of licensing, investors can easily distinguish between regulated and unregulated platforms. Once a virtual asset trading platform operator is licensed, it will be placed in the SFC's regulatory sandbox, which requires more frequent reporting, monitoring and review. By closely supervising virtual asset trading platforms, the Hong Kong SFC will be able to highlight areas where operators should improve their internal control and risk management.

Licensing conditions: 

According to the provisions of the "Position Paper", a trading platform must meet the following six conditions in order to apply for a license from the SFC: 

(1) The licensee may only provide services to professional investors. 

(2) The licensee must comply with the attached "Terms and Conditions Applicable to Virtual Asset Trading Platform Operators". 

(3) The licensee must obtain the SFC's prior written approval for any plan or proposal to introduce or provide new or ancillary services or activities or to make significant changes to existing services or activities. 

(4) The licensee must obtain the SFC's prior written approval for any plan or proposal to add any product to its trading platform. 

(5) The licensee must provide the SFC with a monthly report on its business activities in a format prescribed by the SFC. The report must be submitted to the SFC within two weeks after the end of each calendar month and upon request by the SFC. 

(6) The licensee must appoint an independent professional firm acceptable to the SFC to conduct an annual review of the licensee's activities and operations and prepare a report confirming that it has complied with the licensing conditions and all relevant legal and regulatory requirements. The first report must be submitted to the SFC within 18 months of the date of approval of the license, and subsequent reports should be submitted to the SFC within four months after the end of each financial year and upon the SFC's request.

Operator conditions and terms

In addition to the mandatory provisions of the regulatory framework such as Know Your Customer (KYC), Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations, the New Regulations set more detailed and strict regulatory standards for virtual asset platform operators, such as:

Trust structure requirements: Platform operators should hold customer assets for their customers in a trust through a company. The system is mainly set up to protect customer virtual assets and ensure that these assets are properly separated from the assets of the platform.

Online and offline wallet requirements: For exchanges, the Hong Kong SFC will require platform operators to ensure that they store 98% of customer virtual assets in offline wallets and limit their customer virtual assets held in online wallets to no more than 2%. Exchanges should minimize the transfer of assets from offline wallets that hold most customer virtual assets for trading.

Platform insurance requirements: In terms of exchange insurance coverage, the Hong Kong Securities and Futures Commission will require platform operators to ensure that the insurance purchased is always valid, and its coverage should cover the risks involved in the custody of customer virtual assets held in online storage (full coverage) and the risks involved in the custody of customer virtual assets held in offline storage (most of the coverage, for example
95%).

The introduction of the Hong Kong "New Regulations" means that STO plans have another choice of jurisdiction besides the United States. A commercially successful STO needs to consider not only the transaction structure, intermediary institutions and the choice of trading platforms, but also whether the relevant legal environment is friendly, so that the interests of investors can be protected.