Major Exchange OKX Applies For Hong Kong Crypto Licence

OKX, the world’s third-biggest cryptocurrency exchange by 24-hour trading volume, has officially applied for a licence to operate in Hong Kong under the city’s new regulatory regime that aims to turn it into a global crypto hub.

The firm is the first major industry player to apply for a virtual asset trading platform (VATP) licence under the scheme, which was announced in late 2022 and came into effect in June.

A previous voluntary scheme allowed licensd firms to serve professional investors, while the new rules enable exchanges for the first time to take on retail customers.

Local subsidiary OKX Hong Kong FinTech submitted the application on 16 November, the city’s Securities and Futures Commission (SFC) said.

‘Global hub’

OKX is the seventh company in total to apply for a licence, with a firm called PantherTrade, which has reported links to Hong Kong broker Futu Holdings, submitting an application the day before.

The SFC has been disclosing applicants for the licences in order to reduce the risk of people being taken in by unscrupulous firms claiming to be compliant with city regulations, following a major alleged fraud affecting thousands of customers of the the JPEX trading platform.

“We look forward to working closely with the SFC to advance OKX Hong Kong’s application while promoting the city as a global-leading virtual asset hub,” said OKX global chief commercial officer Lennix Lai on Tuesday.

Companies seeking licences must apply under the rules by 1 March, but the application process is likely to be lengthy and expensive, with an industry insider telling the Hong Kong-based South China Morning Post that the entire process could cost 60 million Hong Kong dollars ($7.7m, £6m).

OKX founder Star Xu said on social media his firm began the application process last year.

Transparency

Most of the firms applying so far are smaller players with ties to Hong Kong or mainland China, which began cracking down on cryptocurrency mining and trading two years ago under a wide-ranging regulatory tightening.

But HKVAEX, a Hong Kong trading platform founded in December 2022 that launched operations in February, was set up by Binance in order to pursue a crypto licence in the city, the SCMP reported last month, citing unnamed sources.

Binance is embroiled in multiple legal disputes with US authorities, and is reported to be in talks with the US Department of Justice over paying a $4bn fine to help settle a multi-year criminal probe.