Securities firms in Hong Kong are currently only able to provide trading targets for BTC and ETH to retail investors.

Written by: Mankun Blockchain

Since the Hong Kong Securities and Futures Commission held a briefing for applicants of virtual asset trading platforms on June 12, all actions of virtual currency exchanges that have successfully applied, been treated as licensed, or had their applications revoked and cleared have attracted much attention. In response, many cryptocurrency media and analysts have shared their views and analyses on this matter. Liu Honglin, the director of Mankun Law Firm, also accepted an exclusive interview with Web3.0 media DeThings, detailed in "Mankun Dynamics | DeThings Interviews Lawyer Liu Honglin, Hong Kong Virtual Currency Exchange 'Clear but Not Withdraw'?".

On June 17, according to a flash report released by the well-known domestic Web3 media Wu Shuo, Tiger Securities announced that it has been approved to upgrade its license and officially provide encrypted trading services to all retail investors in Hong Kong. In response, Mankun Law Firm has collected the opinions of several senior lawyers in the Web3.0 field on "the progress of the Hong Kong Securities and Futures Commission's issuance of licenses" and "whether Tiger Securities obtaining a license implies the gradual opening of virtual currency trading in China," and is sharing them here.

Liu Honglin

Founder of Mankun Law Firm

According to the relevant regulations of the Hong Kong Securities and Futures Commission, after June 1, 2024, all virtual asset trading platforms operating in Hong Kong must obtain a license from the Securities and Futures Commission or be considered as "treated as licensed" virtual asset trading platform applicants, otherwise their operation in Hong Kong will be considered a criminal offense. At the same time, "treated as licensed" applicants will not have much marketing activity targeting individual clients, as they are still a key regulatory focus of the Hong Kong Securities and Futures Commission, which may affect their formal approval.

Currently, Tiger Securities has upgraded from being "treated as licensed" to being licensed, and therefore has officially announced the provision of encrypted trading services to all retail investors in Hong Kong. However, it is worth noting that according to China's current regulatory policies, virtual currency exchanges are not allowed to operate in China or serve Chinese citizens. According to the notice "Notice on Further Preventing and Dealing with the Risks of Speculation in Virtual Currency Trading" (Yinfa [2021] No. 237) issued by ten departments on September 15, 2021, it is explicitly stated that overseas virtual currency exchanges providing services to residents within China through the internet also constitute illegal financial activities. For the domestic employees of relevant overseas virtual currency exchanges, as well as legal persons, non-legal persons, and individuals who are aware or should be aware of their engagement in virtual currency-related business and still provide them with marketing, promotion, payment settlement, technical support, and other services, their relevant responsibilities will be pursued in accordance with the law. Therefore, even though Tiger Securities has obtained an official license issued by the Hong Kong Securities and Futures Commission, it still cannot provide virtual asset trading services to users in mainland China.

At the same time, for other trading platforms that have withdrawn their licenses or had their applications fail, even if they hold compliant licenses issued by specific countries and regions, these licenses only apply to the laws of their home country, and holding a license in another country does not equate to being able to operate globally. Therefore, virtual currency exchanges that only hold qualified licenses from other countries still cannot operate virtual currency exchange businesses in mainland China or Hong Kong, China.

Jin Jianzhi

Mankun Law Firm's International Team

Compared to traditional Hong Kong local securities firms like Victory Securities, the mainland is obviously more familiar with internet securities firms like Tiger Securities, as many mainland residents buy US and Hong Kong stocks through Tiger Securities. However, the legality of providing US and Hong Kong stock investment services to mainland China has always been a concern. According to the relevant regulations of the China Securities Regulatory Commission, any institution providing securities trading services to residents within mainland China must obtain the corresponding license. However, Tiger Securities and similar internet securities firms clearly do not have financial licenses in mainland China, and the compliance of this practice has always been a gray area. Although this model is currently operational, the potential compliance risks should not be overlooked.

Now that Tiger Securities has obtained a license issued by the Hong Kong Securities and Futures Commission and can officially provide encrypted investment services to Hong Kong users, whether they will continue the alternative business model of providing US and Hong Kong stock trading services to mainland residents, and then provide a channel for mainland residents to buy and sell virtual currencies (currently only BTC and ETH for retail investors), remains to be seen, and can only be said to be eagerly anticipated.

Gu Jiening

Mankun Law Firm's International Team

Tiger Securities recently announced that it has been approved to upgrade its license and can open virtual asset trading to Hong Kong retail investors. The trading process usually involves securities firms opening an omnibus account (a client aggregate account) at licensed exchanges (currently only OSL and HashKey), and then conducting virtual asset trading on behalf of each client based on their instructions.

In fact, as early as November last year, Victory Securities and Interactive Brokers were respectively approved to provide virtual asset trading and advisory services to retail investors. As securities firms, they originally held the Hong Kong Securities and Futures Commission's Type 1 license (securities trading) and Type 4 license (advising on securities), and this time they performed the so-called "license upgrade" operation.

Compared to virtual asset exchanges, securities firms receive less attention from the public, especially traditional investors, but they are actually closer to retail investors, especially through a familiar securities firm app, they can provide one-stop trading services for stocks, bonds, futures, options, funds, and virtual assets.

It is worth noting that, according to regulatory requirements, licensed exchanges can only provide "qualified large virtual assets" (currently only BTC and ETH) trading services to Hong Kong retail investors, which means that the securities firms can currently only provide trading targets for BTC and ETH to retail investors. Looking forward to Hong Kong opening up more virtual assets for investor trading in the future.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。