The cryptocurrency exchange, OKX is at the final stretch of its virtual asset service provider (VASP) license in Hong Kong. The exchange is expected to receive approval by March 2024. Hong Kong adopted a pro-crypto stance in 2023 but has since been carefully regulating the industry.

In an exclusive interview, Li Zhikai, OKX’s Global Chief Commercial Officer, discussed the exchange’s preparations, including engaging with banks and undergoing essential technological integrations.

Hong Kong’s journey towards becoming a crypto-friendly jurisdiction commenced in 2023 when it unveiled its licensing framework for cryptocurrency exchanges for retail customers. However, only a select few platforms, including HashKey and OSL, managed to acquire licenses to offer retail crypto trading services. The others, like Huobi and Gate.io, await regulatory approval.

Hong Kong’s Crypto Regulatory Landscape

The process of obtaining a VASP license in Hong Kong comes with its fair share of challenges. The regulatory requirement stipulates a 30% cap on investors’ crypto investments, ensuring they do not risk more than one-third of their net income.

Additionally, the Hong Kong regulator has established a strict crypto asset storage protocol, mandating that crypto exchanges hold 98% of their crypto assets in cold wallets. Additionally, they require exchanges to provide insurance and compensation arrangements to safeguard clients’ interests.

In July, Finance Magnates reported that OKX had gained more than 10,000 new users in a month. The exchange established its Hong Kong entity, OKX Hong Kong, in March 2023, with the aim of obtaining a VASP license and operating as a virtual asset trading platform within the city.

Hong Kong’s decision to open the doors to retail investors garnered significant interest, with more than 80 foreign and Mainland China’s crypto companies expressing their intent to establish a presence in Hong Kong and acquire local licenses, Finance Magnates reported. Among them are companies like Gate.io, Huobi, CoinEx, and Interactive Brokers.

OKX’s Expanding Global Footprint

Besides that, OKX has obtained licenses in other jurisdictions globally as part of its plans to expand its reach. In addition, OKX obtained a Minimal Viable Product (MVP) license from the Dubai Virtual Assets Regulatory Authority (VARA) in June. The licensing followed the exchange's establishment of a new office at the Dubai World Trade Center.

Prior to its expansion in the Middle East, the exchange applied for a French digital asset service provider (DASP) license in May, aiming to establish France as its regional hub in Europe. To facilitate this, OKX created a local subsidiary called OKX France. The application and registration with the French regulator are expected to position OKX to operate in full compliance with European regulations.