OKX nears securing VASP license in Hong Kong

OKX, the digital asset exchange, is on the verge of securing a Virtual Asset Service Provider License (VASP) in Hong Kong, marking a significant milestone in the thriving cryptocurrency landscape of the region. The year 2023 has witnessed a pro-crypto stance from Hong Kong authorities, leading numerous firms to pursue licenses for various crypto trading services within the country.

Presently, Hong Kong has seen approximately 80 firms express interest in establishing operations within its borders, although full licenses for retail trading services have thus far been granted exclusively to HashKey and OSL. In an interview conducted on September 4th, Li Zhikai, OKX’s global Chief Commercial Officer, shared insights into the company’s journey, revealing that they anticipate obtaining the VASP license by March 2024. The company has already initiated negotiations with commercial banks, with plans to establish partnerships for a range of services once the coveted license is secured.

With an eye on the future, OKX has begun technological preparations to hit the ground running in 2024. Initial projections suggest that the exchange anticipates attracting between 100,000 to 200,000 users within its inaugural year of offering retail services. Zhikai emphasized the conservative nature of banks towards the crypto industry, historically shying away from risky assets until the government’s change in stance last year, accompanied by authorization from the Hong Kong Securities and Futures Commission (SFC) to collaborate with web3 firms.

Hong Kong’s ambition to establish itself as a global crypto hub has fueled speculation that the jurisdiction may serve as a “test net” for mainland China. China, in contrast, had previously imposed a blanket ban on cryptocurrencies and trading-related activities. Zhikai noted that the China Securities Regulatory Commission is likely to impose stringent requirements on firms, closely scrutinizing their operational conditions before issuing licenses.

Looking ahead, OKX aims to use the remainder of the year to educate, inform, and build trust among investors. Notably, the firm has forged a partnership with Premier League side Manchester City, underscoring the increasing acceptance of traditional institutions within the crypto space.

The approval of VASP licenses for HashKey and OSL has generated considerable buzz in the crypto market. HashKey recently launched a $100 million fund, primarily focused on altcoins, with less than 50% allocated to Bitcoin (BTC) and Ethereum (ETH). This fund has already attracted high-net-worth individuals from across Asia. During its preparatory phase, OKX revealed its intention to limit investors to using only 30% of their portfolio on the platform to mitigate risks.

Despite the head start enjoyed by HashKey and OSL, competitors are gearing up to enter the fray ahead of the upcoming year. Houbi and Gate.io are also seeking regulatory approval to offer retail services in Hong Kong, joining OKX in a rapidly evolving market landscape.

All firms vying for licenses in Hong Kong are mandated to establish insurance and compensation arrangements while maintaining 98% of their assets in cold wallets to enhance security.

In a similar move, OKX is planning to join the Indian market as part of a larger campaign strategy to spread its wallet services across Asia.