<p>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.</p><h2 id="header-0">Tiger Brokers</h2><p>Tiger 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 &amp; Futures Commission (SFC) license in January to include crypto trading for professional investors and financial institutions based in Hong Kong. The move followed an <a href="https://coinness.com/en/news/1372" rel="noopener noreferrer nofollow">uptick</a> in interest from mainland China-based firms in Q4, 2023.</p><p>In a recent <a href="https://cointelegraph.com/news/hong-kong-exchange-licensing-clarity-attracts-traditional-brokerages" rel="noopener noreferrer nofollow">interview</a> 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:</p><p>“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.</p><h2 id="header-1">HKMA guidance on crypto custody</h2><p>As a testament to the regulatory clarity that has attracted firms like Tiger Brokers, on Tuesday Hong Kong’s central bank <a href="https://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2024/20240220e4.pdf" rel="noopener noreferrer nofollow">issued guidance</a> 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.</p><p>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.</p><h2 id="header-2">Victory Securities</h2><p>In a similar move to that of Tiger Brokers, Victory Securities, another Hong Kong brokerage, <a href="https://coinnesslive.page.link/U7m363DAd7Z5hvgG7" rel="noopener noreferrer nofollow">secured a license</a> 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.</p><p>Moreover, OSL, a licensed Hong Kong crypto exchange, <a href="https://coinnesslive.page.link/gYVgXcmyuT9W1pcb7" rel="noopener noreferrer nofollow">joined forces</a> 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 <a href="https://coinnesslive.page.link/KCBZpbRBvFMre6N16" rel="noopener noreferrer nofollow">submitted</a> a retail trading license application in Hong Kong, indicative of the sector’s continued growth and maturity.</p><p>Nevertheless, navigating the regulatory framework isn’t without its challenges. Web3 firms eyeing Hong Kong may <a href="https://coinnesslive.page.link/K1gMk4wjbFyrh17v5" rel="noopener noreferrer nofollow">need to invest</a> up to $25 million in corporate infrastructure and compliance to secure licensing approval, reflecting the stringent requirements imposed by regulators.</p><p>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.</p>

Regulatory clarity spurs traditional brokerages’ interest in Hong Kong

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