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

A cryptocurrency firm, OSL Digital Securities (“OSL”), said in an exchange filing on 21 August 2020 that the Securities and Futures Commission (“SFC”) had agreed in principle to issue a digital asset licence to OSL. Final approval is subject to certain conditions.

OSL said in November 2019 that it had become the first firm to apply for a digital asset licence from the SFC under new rules allowing crypto exchanges to opt into regulation.

Financial regulators worldwide have been debating whether and how they should regulate the cryptocurrency, or virtual asset services providers industry. The Hong Kong Government has recently started a consultation with the public on its proposed amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance which includes introducing a licensing regime for virtual asset services providers and a two-tier registration regime for precious assets dealers – see also item 1 of this newsletter. Other Asian regulators are also looking to regulate cryptocurrency firms. Singapore is in the process of bringing in licensing for digital asset firms while Japan’s Financial Services Agency already licenses some cryptocurrency exchanges.