Hong Kong's licensed digital asset platform OSL Group's Chief Financial Officer revealed in an exclusive interview today that the much-anticipated licensing system for cryptocurrency OTC dealers may be launched shortly. He expressed optimism about Hong Kong becoming Asia's leading virtual asset market hub and suggested Security Token Offerings (STOs) could emerge as the territory's dominant fundraising model.
Hong Kong Prepares to Introduce OTC Licensing Framework
Following the public consultation on OTC licensing that concluded in April, OSL Group CFO Patrick Hui shared in a Ta Kung Pao interview that Hong Kong may soon implement a licensing regime for cryptocurrency OTC dealers (locally known as "money changers").
The Hong Kong government plans to introduce comprehensive regulatory measures covering:
- Anti-money laundering (AML) protocols
- Cybersecurity protections
- Market standardization initiatives
These proactive regulatory developments are strengthening Hong Kong's position as a virtual asset market leader through clear policy formulation.
Hong Kong's Competitive Advantages in Crypto Markets
Hui highlighted several key advantages positioning Hong Kong for Asian virtual asset leadership:
✅ Tax benefits: No capital gains tax on cryptocurrency investments
✅ Legal clarity: Well-defined regulatory framework
✅ Investor protection: Robust financial safeguards
✅ Strategic location: International financial hub with China proximity
✅ Talent pool: Concentration of financial and blockchain experts
👉 Discover how Hong Kong's regulatory approach compares globally
The dual licensing capability for both cryptocurrency trading and STO services gives Hong Kong unique flexibility compared to markets like Singapore and the U.S. where separate licenses are typically required.
STOs: The Next Frontier in Fundraising
Hui expressed strong confidence in STOs becoming a mainstream fundraising alternative in Hong Kong:
"STOs combine the benefits of traditional securities with blockchain technology's transparency and efficiency. Ownership records become permanently embedded in the blockchain, reducing errors and operational costs while increasing accountability."
Potential STO applications span:
- Corporate fundraising
- Asset tokenization
- Investment products
- Debt instruments
Hong Kong's established financial infrastructure and talent pool create ideal conditions for STO market development.
Changing Attitudes Among Chinese Banks
Notably, Hui observed increasing openness toward cryptocurrency businesses among Chinese banks in Hong Kong:
"Many mainland Chinese banks now actively welcome virtual asset investment funds to open accounts—a stark contrast to jurisdictions like Japan where banking access remains challenging for crypto firms."
Current Market Realities: Crypto ETF Performance
While bullish about long-term potential, market data shows room for growth:
- Hong Kong's Bitcoin spot ETFs currently hold just 4,064 BTC (~$282M)
- Significantly trails U.S. ETF market impact
- Reflects early-stage market development
Hong Kong's Web3 ambitions will require sustained capital inflows and regulatory refinement to fully materialize.
FAQ: Hong Kong's Virtual Asset Developments
Q: When will Hong Kong's OTC licensing take effect?
A: While no official date is confirmed, industry sources suggest implementation could occur within months following April's consultation.
Q: How do STOs differ from traditional IPOs?
A: STOs tokenize ownership on blockchain networks, enabling automated compliance, fractional ownership, and enhanced transparency compared to conventional offerings.
Q: What cryptocurrencies can OTC dealers trade under new rules?
A: Initial proposals suggest Bitcoin and Ethereum focus, with stablecoins like USDT potentially excluded initially.
Q: How does Hong Kong's approach compare to Singapore?
A: Hong Kong offers combined crypto/STO licensing, while Singapore requires separate approvals—giving HK flexibility advantages.
Q: Are retail investors allowed in Hong Kong's STO market?
A: Current regulations primarily target professional investors, but the SFC has signaled potential retail access expansions.
Q: What's driving Chinese banks' crypto acceptance?
A: Institutional demand and Hong Kong's clear regulatory framework are reducing traditional banking hesitations.
👉 Explore Hong Kong's evolving crypto regulatory landscape
This analysis combines financial regulatory insights with market observations to present Hong Kong's developing virtual asset ecosystem—monitor official announcements for policy updates.