On December 15, OSL Exchange — a subsidiary of BC Technology Group (863.HK) — announced it had officially received Hong Kong’s first virtual asset trading license from the Securities and Futures Commission (SFC). The license covers Type 1 (Securities Dealing) and Type 7 (Automated Trading Services) regulated activities, marking a pivotal milestone in the region's evolving digital asset regulatory framework.
This development formalizes what was initially signaled in August 2020, when the SFC indicated its intent to grant the license to OSL Digital Securities. With this approval, OSL becomes the first fully licensed digital asset platform in Hong Kong authorized to operate under the city’s enhanced crypto regulatory regime.
👉 Discover how global crypto platforms are adapting to regulated markets like Hong Kong.
Regulatory Framework: Building on Existing Financial Infrastructure
Unlike jurisdictions such as Japan or Singapore, which have introduced dedicated cryptocurrency laws, Hong Kong has chosen to integrate virtual assets into its existing financial regulatory structure. Under the SFC’s November 6, 2019 Statement on Regulatory Framework for Virtual Asset Trading Platforms, any online platform offering trading in at least one security token falls under SFC jurisdiction and must hold both Type 1 and Type 7 licenses.
- Type 1 License: Permits securities dealing, including brokerage for stocks, bonds, mutual funds, and unit trusts.
- Type 7 License: Authorizes the operation of automated trading systems that match buy and sell orders electronically.
To qualify for either license, applicants must be registered in Hong Kong (or as a foreign entity with local presence), appoint at least two responsible officers with relevant qualifications or experience, and meet stringent compliance, risk management, and capital adequacy standards.
Who Can Use Licensed Platforms?
Importantly, OSL’s license does not allow retail trading. Access is restricted to professional investors, defined by Hong Kong law as:
- Individuals with investment portfolios valued at HK$8 million or more;
- Corporations or partnerships with at least HK$8 million in investments or HK$40 million in total assets;
- Trust corporations managing assets of HK$40 million or more;
- Wholly-owned investment holding companies of professional investors.
Additionally, users must have a Hong Kong bank account and transact solely in Hong Kong dollars. These restrictions reflect the SFC’s cautious approach — prioritizing market integrity and investor protection while testing the waters for broader adoption.
Security, Compliance, and Investor Protection
OSL emphasizes its commitment to security and regulatory compliance. The platform enables trading in high-quality digital assets, including Bitcoin (BTC), Ethereum (ETH), and rigorously vetted Security Token Offerings (STOs). All clients undergo strict Know-Your-Customer (KYC) and anti-money laundering (AML) checks.
To prevent market manipulation and fraud, OSL employs advanced monitoring tools tailored for digital assets, including real-time transaction surveillance and anomaly detection systems.
Other key features of Hong Kong’s virtual asset framework include:
- Segregation of fiat and crypto assets to prevent misuse;
- Insurance coverage for both hot and cold wallets;
- Access to traditional investor compensation mechanisms;
- Special protections introduced by the SFC for virtual asset investors.
These measures aim to build trust in an industry historically associated with volatility and opacity.
Market Response: How Other Players Are Positioning Themselves
While OSL leads the pack, other major players are navigating the regulatory landscape differently. For example:
- Huobi (1611.HK) announced in August that its wallet service obtained a Trust or Company Service Provider license, while Huobi Asset Management secured Type 4 (advisory on securities) and Type 9 (asset management) licenses.
- OKEx (1499.HK) revealed in June that its subsidiary received a Hong Kong trust company registration certificate.
However, these are traditional financial licenses — not virtual asset trading licenses — meaning neither Huobi nor OKEx can currently offer crypto exchange services under Hong Kong’s new framework.
👉 See how leading exchanges are positioning for regulated market entry in Asia.
Given that both companies primarily serve retail clients, entering the Hong Kong virtual asset market would require a strategic shift — effectively abandoning the mass market in favor of high-net-worth and institutional clients.
Regional Context: Comparing Hong Kong with Singapore
Just days before OSL’s announcement, on December 10, DBS Bank — backed by Singapore’s sovereign wealth fund Temasek — launched its institutional digital asset exchange. It supports trading between four fiat currencies (SGD, USD, HKD, JPY) and four major cryptocurrencies (BTC, ETH, BCH, XRP), along with custodial services.
Notably, BC Technology Group entered a service agreement with DBS Bank on December 11 to provide technical infrastructure support — highlighting growing collaboration between traditional finance and crypto-native firms across borders.
This contrast underscores differing regional strategies: while Singapore moves aggressively toward institutional crypto integration, Hong Kong takes a more controlled, compliance-first approach.
Leadership Spotlight: The Story Behind BC Technology Group
BC Technology Group’s executive director, Alvin Chung — nicknamed the “Shell King” of Hong Kong — has a remarkable backstory. Born in 1951, Chung reportedly began his career as a tailor in Tsim Sha Tsui before transitioning into foreign exchange trading. His financial acumen propelled him into high-stakes investments and corporate takeovers, earning him a reputation as a master of financial engineering within Hong Kong’s “Fujian Gang.” He has collaborated with prominent figures including Jack Ma, Huang Guangyu, Xu Zheng, and Ning Hao.
His leadership reflects the dynamic blend of old-world connections and new-era innovation shaping Hong Kong’s fintech evolution.
Will Mainland China Follow Hong Kong’s Lead?
There is ongoing dialogue between Beijing and Hong Kong’s financial regulators. For instance, the launch of China’s STAR Market drew inspiration from Hong Kong’s listing reforms.
Recent signals suggest cautious openness: while PBOC officials continue to ban coin issuance (ICOs) and emphasize strict controls on cryptocurrency issuance under the central bank law, there have been discussions about classifying certain tokens — like Bitcoin — as virtual commodities rather than securities, potentially carving out space for regulated trading.
Could Beijing eventually adopt elements of Hong Kong’s model? While full liberalization remains unlikely in the short term, the success of licensed platforms like OSL may influence future policy discussions on digital asset regulation on the mainland.
👉 Explore how Asia’s regulatory shifts could shape the next phase of crypto adoption.
Frequently Asked Questions (FAQ)
Q: What types of crypto assets can be traded on OSL?
A: OSL supports trading in Bitcoin (BTC), Ethereum (ETH), and approved Security Token Offerings (STOs). All tokens undergo rigorous due diligence before listing.
Q: Can retail investors use OSL in Hong Kong?
A: No. Only professional investors meeting minimum portfolio thresholds (HK$8 million for individuals or HK$40 million for institutions) can access the platform.
Q: Is customer crypto insured on licensed platforms?
A: Yes. Under Hong Kong’s framework, licensed platforms must ensure client assets — whether in hot or cold wallets — are covered by insurance against theft or loss.
Q: How does Hong Kong regulate crypto compared to Singapore?
A: Singapore has a dedicated payments regime under the PSA and allows broader institutional access. Hong Kong integrates crypto into existing securities laws and currently restricts access to professional investors only.
Q: Why did Huobi and OKEx get different licenses?
A: They applied under traditional financial categories (e.g., asset management or trust services), not the SFC’s virtual asset trading framework. Thus, they cannot operate crypto exchanges in Hong Kong under current rules.
Q: Could mainland China adopt Hong Kong’s crypto model?
A: While full adoption is unlikely soon due to capital control policies, Beijing may study Hong Kong’s experience — especially regarding investor protection and anti-money laundering frameworks — for potential future reference.
Core Keywords: Hong Kong crypto license, OSL Exchange, professional investors, SFC regulation, virtual asset trading, Type 1 and Type 7 license, crypto compliance, institutional crypto platform