OSL first to use for a digital asset cryptocurrency exchange license

Hong Kong-based OSL, a part of BC Group, stated on Thursday it had develop into the primary cryptocurrency agency to use for a digital asset exchange license from the Securities & Futures Fee (SFC).

Hong Kong hosts dozens of cryptocurrency exchanges, together with among the world’s largest, and the SFC on Wednesday revealed new guidelines, among the many first of their variety, that enable exchanges to decide into regulation. Market individuals stated few others are anticipated to observe OSL’s lead, nonetheless.

Market watchdogs worldwide have been debating whether or not and the way they need to regulate the cryptocurrency exchange business, with many selecting initially to give attention to investor safety issues.

The brand new guidelines stipulate, amongst different necessities, {that a} licensed exchange should present companies to skilled buyers solely, have an insurance coverage coverage to guard purchasers in case property are misplaced or stolen, and perform due diligence into the cryptocurrencies traded on their exchanges.

“We congratulate the SFC on announcing its digital asset licensing regime and are proud to be the first applicant,” stated Wayne Trench, chief govt of OSL, which offers digital asset brokerage, exchange and custody companies for establishments {and professional} buyers.

Many different exchanges in Hong Kong stated they welcomed the principles, however few are anticipated to use.

“We believe that a handful of exchanges will take the invitation to opt-in into SFC’s regulation plan, however, we do not expect to see a large number of exchanges rushing into the regulation net,” stated OKEX, one of many world’s largest exchanges, stated in a notice.

OKEX, which has a big presence in Hong Kong, nontheless described the principles as “a positive move for the overall cryptocurrency industry”.

Some hedge funds and household places of work commerce cryptocurrencies however retail buyers make up the majority of buying and selling at most giant exchanges.

“This framework is in a space where big exchanges will find it difficult to comply without losing too much of their business – a major strategic decision to take – while many smaller exchanges will find it difficult to comply from a practical perspective,” stated Hoi Tak Leung, counsel at regulation agency Ashurst.

There are roughly 3,000 cryptocurrencies on this planet with a complete market cap of $200 billion-$300 billion in keeping with estimates from business information supplier CoinMarketCap. These might be traded on over 200 cryptoexchanges.

Ashley Alder, the SFC’s chief govt, stated in a speech on Wednesday that the SFC couldn’t regulate all cryptocurrencies and cryptocurrency exchanges with out new laws, as bitcoin for instance, didn’t rely as a safety underneath present guidelines.

As a substitute the SFC proposed that exchanges can decide into regulation by permitting buying and selling of no less than one safety on their platform.