Bithumb celebrates 10th anniversary with a commitment to change

In less than a year since Hong Kong regulators gave the green light to crypto exchanges, there's been a noticeable surge of interest among traditional financial institutions and brokerages eager to secure their digital asset licenses for trading.Photo by Florian Wehde on UnsplashTiger BrokersTiger Brokers, a Beijing-headquartered one-stop trading brokerage with nine million international customers, offers one such example. The firm upgraded its Type 1 Hong Kong Securities & Futures Commission (SFC) license in January to include crypto trading for professional investors and financial institutions based in Hong Kong. The move followed an uptick in interest from mainland China-based firms in Q4, 2023.In a recent interview with Cointelegraph, John Fei Zeng, the CFO and director of Tiger Brokers, revealed that the firm currently boasts 865,500 funded accounts in Hong Kong, managing $18.9 billion in assets. Zeng stated: "Residents of Hong Kong will be able to trade virtual assets such as Bitcoin and Ethereum alongside stocks, options, futures, funds, and ETFs [Through Tiger Trade]." He explained that as part of the firm's expansion plans, additional digital assets will be evaluated. HKMA guidance on crypto custodyAs a testament to the regulatory clarity that has attracted firms like Tiger Brokers, on Tuesday Hong Kong's central bank issued guidance for authorized institutions interested in offering custody services for digital assets. The Hong Kong Monetary Authority (HKMA) outlined comprehensive risk assessment procedures and emphasized the importance of robust policies, oversight, and resource allocation to manage custodial activities effectively. Notably, the HKMA's guidance seeks to address concerns stemming from recent industry mishaps, including the collapse of FTX, Terra and Three Arrows Capital (3AC), by mandating stringent safeguards to protect clients' digital assets from theft, fraud or misappropriation. Key requirements include independent systems audits, secure storage practices and transparent record-keeping, underscoring the regulator's commitment to fostering trust and stability in the digital asset ecosystem. Victory SecuritiesIn a similar move to that of Tiger Brokers, Victory Securities, another Hong Kong brokerage, secured a license from the SFC last November to offer crypto trading services for retail investors. The company reported a significant surge in virtual asset transactions and new customer acquisitions, prompting plans to introduce trading discounts to incentivize compliant and safe virtual asset trading services. Moreover, OSL, a licensed Hong Kong crypto exchange, joined forces with Interactive Brokers in November 2023, enabling the latter to offer bitcoin and ether trading to retail investors through its platform. Further underscoring the evolving regulatory landscape, crypto exchange Bybit submitted a retail trading license application in Hong Kong, indicative of the sector's continued growth and maturity. Nevertheless, navigating the regulatory framework isn't without its challenges. Web3 firms eyeing Hong Kong may need to invest up to $25 million in corporate infrastructure and compliance to secure licensing approval, reflecting the stringent requirements imposed by regulators. As Hong Kong continues to refine its regulatory framework and enhance investor protections, the stage is set for further collaboration between traditional financial institutions and emerging crypto players within the Chinese autonomous territory.

The Virtual Assets Regulatory Authority (VARA), the regulatory body which oversees the digital assets market within the emirate of Dubai in the United Arab Emirates (UAE), has taken corrective action against seven unlicensed crypto entities. Fines issuedAccording to an enforcement notice, published to the VARA website on October 8, the agency issued fines relative to a number of firms that it found were engaging in unlicensed virtual asset-related trading activity. The fines ranged from between 50,000 to 100,000 UAE dirhams (AED), equivalent to between $13,600 and $27,200 in U.S. dollars. The agency outlined that it was taking this corrective action in order to continue its enforcement efforts so as to safeguard Dubai’s virtual asset ecosystem. In its enforcement notice, the regulator did not disclose the names of the entities that have been sanctioned. The agency said that its investigations are ongoing, in partnership with local law enforcement.  A statement from the Regulatory Affairs and Enforcement division within VARA was provided, stating: “VARA will not tolerate any attempts to operate without appropriate licenses, nor will we allow unauthorized marketing of virtual asset activities. Our marketing regulations further emphasize Dubai’s commitment to ensuring transparency and always protecting stakeholder interests.”Photo by Alex Block on UnsplashCease and desist ordersIn addition to fines, VARA also issued the seven firms with cease and desist orders for breaching marketing regulations. Marketing by crypto firms is an area the regulator has been focusing on recently. Last month, VARA published a press release, outlining that it had updated its crypto regulations to specifically deal with marketing-related matters. Alongside that update, it issued a guidance document, clarifying the responsibilities of virtual asset service providers (VASPs) relative to marketing practices. A schedule of fines was provided in the case of a breach of the regulations, while the update set out a need for a mandatory disclaimer on marketing material to indicate that virtual assets are volatile and may lose their value, fully or partially. The Dubai regulator is not the first to home in on the marketing activities of crypto businesses. In the UK, the Financial Conduct Authority (FCA) enforced additional rules related to crypto marketing in late 2023. Some crypto businesses found the requirements too arduous and left the UK market as a direct consequence. Public warningIn its enforcement notice, the Dubai regulator also had a message for the trading and investing public, stating: “This public warning is VARA’s market notice to all to avoid engaging with any unlicensed firms.” The regulator added that interacting with unlicensed entities exposes both individual investors and institutions to both financial and reputational risk.  Furthermore, it warned of “potential legal consequences” for regulatory violations. “Only firms licensed by VARA are authorised to provide virtual asset services in/from Dubai, and the Authority remains steadfast in its commitment to protect consumers and investors, and to preserve market integrity,” the regulator further asserted. 

Jingdong Coinlink Technology Hong Kong Limited, a branch of JD Technology Group, has declared its intention to launch a stablecoin tied 1:1 to the Hong Kong dollar (HKD). Despite its status as a sandbox participant under the Hong Kong Monetary Authority (HKMA), Jingdong Coinlink has clarified that this does not imply endorsement or licensure for stablecoin issuance. The company aims to offer this blockchain-based stablecoin as a solution for businesses seeking efficient, cost-effective and secure payment methods.Photo by Ben Cheung on PexelsThe proposed stablecoin promises redemption on a 1:1 basis, supported by reserves of “highly liquid, highly-trusted assets” held in licensed financial institutions. Furthermore, Jingdong Coinlink commits to ongoing cooperation with global regulatory bodies to ensure compliance with existing and future legal frameworks. Cryptocurrency developments in Hong KongThis announcement comes amidst a series of significant cryptocurrency-related activities in Hong Kong. On July 23, CSOP Asset Management launched Asia’s first Bitcoin futures inverse product, following their successful Bitcoin Futures ETF in December 2022. Additionally, the cryptocurrency exchange HKX recently retracted its application for a license from the HK Securities and Futures Commission (SFC), advising users to withdraw their crypto assets. This withdrawal adds to the growing list of 12 other platforms that have either pulled back their license applications or had them returned by regulatory authorities.