Institutional investment broker OSL receives digital asset trading license from HK regulator

Hong Kong digital asset trading platform OSL has received a “virtual asset license” from the territory’s Securities and Futures Commission (SFC). The company, which has been listed on the HK stock exchange for 15 years through parent company BC Technology Group and serves institutional and professional investors, received the first-of-its-kind permission after voluntarily undergoing a “rigorous vetting” from the regulator.

OSL does not provide services to retail investors, with its clientele restricted to institutions, high net worth individuals (over US$1 million and above) and family offices. If the Hong Kong SFC license also permits it to offer its services in mainland China, OSL would have a huge market to appeal to.

The company’s services include over-the-counter (OTC) and iRFQ (intelligent request-for-quote) trading. BC Technology Group reported a year-on-year revenue increase of 47% in the first half of 2020, with record annualized trading volumes of US$28 billion.

OSL posted the announcement on its website on December 15, 2020. It has received both a Type 1 (securities dealing) and Type 7 (automated trading) license to provide insured wallets and offer “Big 4-audited” services. It said it would provide a trading platform for BTC, ETH, “other high-quality cryptocurrencies” and “select security token offerings.”

Compliant token offerings: time to look at BSV?

That last point is an important one: Bitcoin SV (BSV) is both a high-quality asset and promotes the development of fully-compliant blockchain tokens, which includes security tokens that meet the requirements of the jurisdictions in which they’re offered. BSV also has the only blockchain capable of processing unbounded amounts of data and that can handle the kind of data traffic required for the task.

Given OSL’s longevity in Hong Kong and its select clientele, it is unlikely the SFC would grant a similar license to smaller or newcomer companies in the digital asset trading space.

It is unknown at this exact stage what services OSL may be able to offer in mainland China. However the company has also applied for a similar license from the Monetary Authority of Singapore (MSA) under that country’s Payment Service Act. Both Hong Kong and Singapore are both lucrative gateways to many investors in their own territories and in the PRC.

OSL described the SFC as applying “the same heightened level of regulations already governing the securities markets to digital assets, making it one of the most comprehensive and investor-friendly jurisdictions for institutional and professional investors.”

It said it will hold its digital assets in client-segregated wallets with insurance protection. Customers will fully complete its KYC and AML requirements, and OSL also said it would “mitigate the risk of market misconduct through market surveillance, as well as transaction monitoring and additional digital asset specific controls.”

‘New era of growth’

CEO Wayne Trench said institutional investment in digital assets such as BTC had rapidly accelerated in recent years, and licensing would lead the industry to a new era of growth.

“The award of licenses is validation of our belief that digital assets are a key part of the global economy and the increasingly technology focused financial services ecosystem. We are more focused than ever in our commitment to leading the way in driving institutional investment in digital assets,” he said.

Having Hong Kong’s SFC issue this license for the first time is a sign that professional investors and their service providers are becoming more interested in digital assets—but also that the market desires a more professional, secure and compliant approach first.

Factors such as blockchain security and protocol stability, both of which are strong points for BSV, are also a good sign. Digital assets and their dependent tokens cannot gain long-term market confidence if the platforms they live on cannot be trusted, or are constantly subject to protocol-level change. It’s also time for investors to take a deeper look at the technologies that back the assets they trade, rather than relying on media hype.

See also: CoinGeek Live panel on The Future of Exchanges & Trading in a Tokenized World

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