OKX Becomes Another Crypto Exchange to Start HK Branch

The number of big cryptocurrency brands looking to enter the Hong Kong market continues to grow. All thanks to new regulations on digital assets, which are set to take effect in June and make China's special administrative region a crypto enclave. OKX, the second-largest exchange in the world in terms of trading volumes, has just announced plans to open a branch in HK.

OKX to Apply for VASP License and Launch Hong Kong Subsidiary

According to Tuesday's press release, OKX has established a Hong Kong entity to launch virtual asset services and plans to apply for a virtual asset service provider (VASP) license under the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022, set to be effective from June 2023.

This move follows over a year of preparation by OKX to meet expected regulatory requirements in areas, such as organization, security, compliance and product. Hong Kong has emerged as a hub for the crypto sector in recent years, growing in significance for OKX and numerous other innovative companies, entrepreneurs, and top talent as regulatory frameworks evolve.

"OKX has an ambitious vision when it comes to pursuing licenses in relevant and appropriate jurisdictions, and we are committed to working with the SFC throughout the application process. We take security, custody, AML and compliance very seriously and are keen to demonstrate how we can meet and exceed the robust standards expected of virtual asset service providers under this regulatory regime," Bing Zhao, the General Counsel at OKX, commented.

At the forefront of innovation and regulation, we're excited to announce the launch of our Hong Kong entity!

As we continue our mission to shape the future of the virtual asset industry, we plan to apply for licenses in Asia's world city. 🌏

— OKX (@okx) March 28, 2023

Lennix Lai, the Managing Director of Global Institutional at OKX, emphasized that regulation and licensing are crucial for the future success of the crypto and Web3 sectors. OKX sees tremendous potential in Hong Kong and is dedicated to investing in talent and collaborating with regulators over the next five years to keep growing the ecosystem locally.

"Through the new VASP regime, the Hong Kong government has created a robust regulatory framework and the right conditions for Hong Kong to become a world-leading virtual asset hub Hub A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method Read this Term. We're looking forward to applying for the relevant licenses via our Hong Kong entity," Lai added.

Hong Kong Set to Legalize Crypto

The first news that Hong Kong would decide to legalize cryptocurrency trading and allow retail customers to trade digital assets came in October 2022. Moments later, there was official confirmation that the SFC financial regulator was considering approving trading on virtual assets ETFs.

A month later, SEBA Bank, a cryptocurrency-friendly banking entity, decided to launch its Hong Kong office, setting its sights on expansion in the APAC region.

A significant update was published in February when in October there was news reporting that the SFC had considered allowing retail cryptocurrency trading was confirmed. More than a month ago, the commission had launched a consultation on the matter and confirmed that it would begin to officially regulating the industry as of 1 June.

Following this announcement, a number of major cryptocurrency players began to announce that they were setting up local offices and applying for a VASP license. Among them were Huobi, which wants to obtain all necessary authorizations before the June deadline, and Gate.io, which intends to launch a new Gate HK platform in the region.

According to last week's news, more than 80 companies are waiting in line to join the Web3 ecosystem forming in Hong Kong.

Christopher Hui, Secretary for Financial Services and the Treasury Bureau, delivers the opening keynote and reinforces HK government’s vision to develop the virtual asset sector in Hong Kong.
He mentions Web 3 presents a paradigm shift to the internet era. pic.twitter.com/9MGkWOCj0O

— Everest Ventures Group (EVG) (@EVG_Ventures) March 20, 2023

During the Aspen Digital Web 3 Investment Summit on 20 March 2023, Christian Hui, Hong Kong's Secretary for Financial Services and the Treasury delivered a speech emphasizing the goal of positioning China's Special Administrative Region as a leader in the Web3 revolution. He disclosed that since October 2022, over 80 crypto firms from abroad and Mainland China have shown interest in setting up branches in Hong Kong and acquiring local licenses.