When Hong Kong regulators gave crypto agency OSL a nod of approval final week, it was the icing on the cake for the HKEX-listed digital asset buying and selling platform.
Hong Kong’s Securities and Futures Fee (SFC) granted BC Group crypto subsidiary OSL an “approval-in-principle” for its license utility for Sort 1 (dealing in securities) and Sort 7 (automated buying and selling service or ATS), because it pertains to crypto and digital property.
The larger image is that Asian crypto hubs like Hong Kong, Singapore and Japan have a clearer regulatory stance going ahead and are progressing quicker than the U.S. and Europe. Maybe this ought to be anticipated, provided that Asia stays the worldwide chief when it comes to crypto buying and selling volumes.
“I think regulatory progress has been so much more significant than in North America,” OSL CEO Wayne Trench stated in an interview. “You’ve got regulators who’ve been front-foot trying to embrace this movement and embrace the technology. The West is perhaps slightly less developed with more obscurity or uncertainty, which just really makes it difficult right for the traditional institutions to engage.”
Learn extra: Hong Kong Regulator Offers Crypto Trade OSL Tentative Licensure Approval
This isn’t to say Hong Kong is delivering light-touch regulation in terms of digital property; fairly the other, stated BC Group CEO Hugh Madden.
“The SFC flies very carefully and is heavily focused on consumer protection,” Madden stated. “If you look at the details of the SFC’s licensing framework, it’s quite specific. They prescribed mandatory insurance to protect consumers with specific percentages for hot and cold storage. When you add in the levels of controls, capital and scale of your organization, it’s really quite a tough hurdle.”
The SFC didn’t reply to a request for remark by press time.
OSL, which states it’s the first crypto firm to be granted provisional approval by the SFC, has acquired insurance coverage cowl for each sizzling (related to the web) and chilly (totally offline) storage of digital property however declined to enter particulars of the dimensions of canopy or markets offering it. OSL can be set other than different crypto performs in that it’s audited by Massive 4 accounting agency PwC.
Learn extra: Crypto.com Lands File $360M Insurance coverage Cowl for Offline Bitcoin Vaults
When it comes to timelines, Madden stated if all of the SFC’s supervisory necessities are met, OSL ought to have its full license by the tip of this yr.
Asian autonomy
The SFC introduced its regulatory framework for digital asset buying and selling platforms again in November 2019, emphasizing the regulator would solely grant licenses to platform operators assembly requirements similar to licensed securities brokers and automatic buying and selling venues.
“With the license in principle given to OSL now, it would appear the SFC is keen to promote the licensing framework that was clarified last November,” stated Malcolm Wright of business group International Digital Finance.
Learn extra: PwC Report Reveals Main Progress in Crypto M&A in Asia and Europe
Wright, a compliance knowledgeable primarily based in Hong Kong, stated Singapore, Japan and Hong Kong have a pure benefit in that they can develop their frameworks with relative autonomy.
“The U.S. and Europe are more complex environments,” he stated through e-mail. “For Europe, first there needs to be European agreement (e.g., 5th Anti-Money Laundering Directive) and then each country has to implement it into law – a process that can take several years to complete and can still lead to unevenness in regulatory approach.”
‘Travel Rule’ panorama
OSL and BC Group have additionally earned their regulatory chops due to their shut involvement with the Journey Rule Protocol (TRP), a Monetary Motion Job Pressure (FATF) “Travel Rule” answer for crypto led by Dutch lender ING and Normal Chartered Bank, and together with Constancy Digital property and BitGo.
Learn extra: In Banking First, ING Develops FATF-Pleasant Protocol for Monitoring Crypto Transfers
Madden identified that OSL has license functions underway in each Hong Kong and Singapore. He has personally adopted the progress of FATF guidelines for crypto carefully in Asia and internationally, and has had the possibility to have interaction with a number of regulators.
Madden described the Journey Rule answer jurisdictional map as “an interesting landscape,” with digital asset service suppliers (VASPs) within the massive economies tending to be extra domestically centered, whereas very trade-oriented monetary facilities are working in a extra worldwide style.
“Fortunately, we’re all well-known to each other, and all the groups are brilliant at communications in order to try and stay aligned,” Madden stated.
