By BC Group CEO Hugh Madden
For many professional investors, the world of digital assets has looked alluring yet daunting. Alluring because of the limitless freedom it represents; daunting because of the apparently unregulated nature of the ecosystem.
To those who are part of the system, it has long been clear that digital assets cannot fulfill their potential without regulatory approval. And that approval process is now rapidly gathering pace – with Hong Kong leading the way.
On 21 August, OSL (part of Hong Kong-based BC Technology Group (stock code: 863 HK) led the way and announced to the market that it had received approval in principle from Hong Kong’s Securities and Futures Commission (SFC) for Type 1 (dealing in securities) and Type 7 (automated trading service) licenses.
The decision by the SFC puts OSL in a unique position globally. Let us be abundantly clear: receiving approval-in-principle is no small achievement. Once OSL meets the conditions set by the SFC for formal license to be issued, the company will become the world’s only, publicly listed, licensed, insured and Big-4 audited digital asset trading platform.
This is a significant step forward for digital assets becoming mainstream in Hong Kong.
The SFC licensing regime has been very carefully planned over the past several years, and includes rigorous compliance and security requirements, reinforcing Hong Kong’s status as a forward-thinking global financial center, with the highest standards in investor protection and market integrity. Licensees may also deal in security tokens, a critical feature that will usher in innovative capital raising channels for institutions, and new financial products to the growing digital asset financial services market in Hong Kong and globally.
As you read this, an application for an equivalent license in Singapore is in process that will allow OSL to act as a Major Payment Institution providing all dealing services associated with digital payment tokens.
Divergence will become increasingly apparent in the digital asset ecosystem, creating a regulatory “moat” with players either regulated or unregulated on either side. It is those in the first camp who will be exclusively positioned to address the needs of institutional investors. As such, the heightened levels of trust and confidence they will gain stand to translate to greater market share at the expense of unregulated competitors.
Having been selected as a standard bearer, OSL, and by extension BC Group, now represents the future for these investors in terms of both operational capability and compliance.
Regulation under exacting guidelines is not only good for BC Group and its own investors (we are already seeing the effects of the new license on its share price); it also means that the digital assets sector as a whole is rapidly becoming mainstream and an integral part of the global financial services ecosystem.
OSL is Asia’s most comprehensive digital asset platform providing brokerage, exchange, software-as-a-service and insured custody solutions to professional investors.
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