Produced by | Bailu Living Room
Author: Lulululu
More than ten years after the emergence of crypto assets, centralized trading platforms have reaped the biggest benefits. For example, the industry leader Binance has made its founder Zhao Changpeng worth more than 5000 billion yuan in four years. In 2021, he surpassed Nongfu Spring Chairman Zhong Shanshan to become the richest Chinese.
As encryption is gradually recognized by the mainstream, it will become the bottom-level financial technology lifeline engine for the next round of competition between countries and regions. There is not much time left for centralized exchanges.Decentralized trading platforms are on the left, such as Uniswap and Curve, and compliant and licensed centralized platforms are on the right, such as Coinbase and Kraken in the United States, OSL and Hashkey in Hong Kong, and a number of trading platforms that are applying for licenses.
In the process of virtual asset trading platforms complying with regulations and obtaining licenses, on the one hand, the US SEC continued to bombard Binance in June 2023. On the other hand, in June 6, the Hong Kong Securities and Futures Commission (SFC) accelerated the process of promoting the compliance of virtual asset trading platforms.
On September 9, the Hong Kong Securities and Futures Commission met with the media on virtual asset trading platforms and announced a list of four applicants for virtual asset trading platforms (VATP), namely HKVAX, HKBitEx, HongKong BGE Limited and Victory Fintech.The four trading platforms are still in the application stage and have not yet been approved to conduct business. However, they are also called the "New Big Four in Hong Kong". Compared with the two licensed platforms, they are not short of money. Because of their low valuation and new business, they have the potential for rapid business growth.
As we all know, due to restrictions on mainland retail customers, applying for a virtual exchange license in Hong Kong is a "very expensive", "not profitable in the short term" and "can only look at long-term value" thing.However, Coinbase, the largest compliant virtual asset trading platform in the United States, has been listed on the Nasdaq with a market value of US$167 billion.In the Hong Kong compliant virtual asset exchange market, it is still a battle between gods, each showing off their magical powers.
There are currently four virtual asset trading platforms that are applying for licenses in Hong Kong, plus OSL and Hashkey, which have obtained VATP licenses. What are the business directions, core teams, and capital strengths of these six platforms?Can one company stand out and become the representative of Asian crypto compliant exchanges, bringing a safer and more compliant crypto asset experience to new Web2 users, and compete head-on with Binance and Coinbase in the global market?We provide an in-depth analysis as follows.
1. OSL relies on BC Technology to innovate STO and trading services
OSL originated in 2018, when the Hong Kong-listed company "Brand China" established the digital asset trading platform OSL. In 2019, the company was renamed "BC Technology (00863.HK)". In December 2020, OSL obtained the No. 12 Securities Trading License and No. 4 Automated Trading License issued by the Hong Kong Securities and Futures Commission, providing digital asset trading services to professional investors in the Asia-Pacific region. In the following years, OSL was also awarded the No. 9 & No. XNUMX licenses for virtual assets. Its current business includes SAAS, brokerage, exchange and custody services, serving professional institutions and retail investors.
On August 2023, 8, OSL's parent company, BC Technology, a Hong Kong-listed company, issued an announcement that its wholly-owned subsidiary OSL has been approved by the Hong Kong Securities and Futures Commission to upgrade its existing license, and will now officially provide digital asset trading services for mainstream currencies such as Bitcoin and Ethereum to retail investors.On August 8, OSL held a press conference to officially launch the retail business of its trading platform at its headquarters office in Causeway Bay, Hong Kong.
Look at the business aspects of OSL that have public information.
First, Security Token Offering (STO). In July 2022, BCTG STO Limited, a wholly-owned subsidiary of OSL's parent company BC Technology, issued a US dollar bond STO, becoming Hong Kong's first trial of a compliant STO. The company also served as a bond guarantor for the STO. Other issuers involved include Animoca Brands, United Financial Group, China Fortune Financial Group, Volmart and Dasheng Asset Management Co., Ltd.However, due to the relative lack of STO asset investors, the current development of STO issuance cases is only an isolated case.Nevertheless, on September 2023, 9, OSL also announced a strategic cooperation with Harvest Global Asset Management Co., Ltd. in security tokens (STO).
Second, multiple exchanges’ trading and liquidity cooperation. In January 2022, Latin American company Allaria Technology Services LLC and OSL announced an agreement to provide comprehensive, secure and compliant digital asset trading and custody technology and liquidity services to Latin American institutions and professional investors. In June 1, US Internet brokerage Interactive Brokers and OSL signed an agreement to appoint OSL Digital Securities to provide exclusive virtual asset trading services for Interactive Brokers in Hong Kong, China. In March 2022, OSL reached a transaction cooperation with Victory Securities, with OSL providing trading services for Victory Securities.
In addition to the Hong Kong license, OSL is also actively planning overseas licenses. On September 9, BC Technology announced that OSL Sigapore (OSLSG) is preparing to submit a new license application to the Monetary Authority of Singapore (MAS).
Capital level.OSL has significantly reduced its fundraising costs due to its backing by the listed company BC Technology, and has been supported by Fidelity and Singapore’s sovereign funds.可以说是所有“持牌申牌”交易平台中“最舒服的一家”。BC科技分别于2021年1月通过补股筹集9000万美元，及通过两次股权配售从美国富达国际融资2000万美元。2021年6月，OSL又通过BC Group在港股增发新股，以每股17港元的价格向新加坡政府投资公司GIC募集5.43亿港元（合7000万美元），报道称GIC也参与了2018年Coinbase的3亿美元E轮融资。
The exchange-related ecological fund under the OSL ecosystem is also in the active preparation stage. It is expected that the ecological fund will help OSL further improve the upstream and downstream surrounding infrastructure of the exchange.
Team level.The actual controller of OSL's parent company BC Technology is Gao Zhenshun, the "shell king" of Hong Kong stocks. According to people familiar with the matter, the operation path of Xinhuo Technology and OKLink in Hong Kong stocks through backdoor listing is closely related to Gao Zhenshun. The three founders and current executive team of OSL trading platform are all from top international financial institutions and consulting companies such as HSBC, Accenture, Credit Suisse, Barclays Bank, etc., and all have certain Web3 experience.
OSL is backed by a well-capitalized listed company, and its management team has the ability to operate crypto assets in compliance and expand globally. It continues to explore the STO business and looks forward to subsequent innovations and breakthroughs in the business.
(II) Hashkey, the pioneer of Ethereum in China, but the group layout is slightly broad, looking forward to a breakthrough
Hashkey Exchange is a licensed virtual asset trading platform in Hong Kong and is one of the major business lines of Hashkey Group.
Hashkey Group and its founder, Dr. Xiao Feng, are the core promoters of the Web3 process in Hong Kong, the earliest angel investment institution of Ethereum, the operator of the crypto summit "Wanxiang Carnival" for many consecutive years, and the first batch of industry OGs in Shanghai to deploy crypto assets and Web3. Unlike the centralized exchanges and Web3 media power represented by the Beijing circle in the early years of the mainland, HashKey represented the internationalization, low-key pragmatism and technological power of the Shanghai Chinese circle from the beginning.
Looking at the HashKey team, Web3 Native has authoritative influence
The founder of HashKey Group is Dr. Xiao Feng, Vice Chairman and Executive Director of China Wanxiang Holdings Co., Ltd., Chairman and General Manager of Shanghai Wanxiang Blockchain Co., Ltd., and Founder of Wanxiang Blockchain Lab. He holds a Ph.D. in Economics from Nankai University and has more than 20 years of experience in securities and asset management. He has been paying close attention to and preaching blockchain technology since 2015, and donated $2015 to the Ethereum Foundation through Wanxiang Blockchain Lab in 50, and is known as the "Ethereum China Guide."
HashKey Group COO Weng Xiaoqi invested in and incubated Web2022 company GameSpace as early as February 2. In April 3, HashKey Group acquired GameSpace products and team, and Weng Xiaoqi joined HashKey Group. Weng Xiaoqi graduated from the Department of Software Engineering of Xiamen University. He worked at Huobi from August 2023 to 4, from VP of Marketing to CEO of Huobi Global Station. He previously served as Senior Vice President of Jiedaibao and Product Director of Sohu Quick Station.
Hashkey Group Chief Business Officer CCO Zhang Dayong joined on July 2023, 7. He was the former head of payment business of Lazada, a Southeast Asian e-commerce giant under Alibaba. Zhang Dayong graduated from Tsinghua University with a degree in computer software. He joined Alipay in 12 and served as general manager of Southeast Asia. In September 2008, Zhang Dayong began to serve as Lazada's payment director.
Deng Chao, CEO of Hashkey Capital, is an early member of Wanxiang Blockchain. He has worked at Bosera Fund, China Wanxiang Holdings and Tonglian Data. He has more than 10 years of experience in asset management and financial technology. HashKey Capital, which Deng Chao is in charge of, is one of the most influential and largest crypto funds in the world. Since its establishment, the asset management scale has exceeded US$10 billion. So far, it has invested in more than 500 projects from multiple tracks such as infrastructure, tools, and applications, such as Algorand, Acala, Biconomy, DODO, Injective Protocol, etc.
Business level.HashKey Group's businesses include exchanges, brokerage, venture capital, Web3 infrastructure services and technology services, serving institutions, family offices, funds and professional qualified investors respectively.
Hashkey Exchange is a one-stop service that covers 2B+2C business formats. On August 8, the platform officially launched a virtual asset trading service App for retail customers.The group's COO Weng Xiaoqi said that Hashkey Exchange will conduct compliance business in other countries outside of restricted regions such as China and the United States, and may be the first to launch spot ETFs under the compliance framework, and even provide underlying infrastructure services for funds applying for ETFs in Hong Kong.
Capital level.Hashkey has previously received financing.According to a report by Bloomberg in May this year, Hashkey Group is reportedly seeking $5-10 million in financing at a valuation of over $1 billion.But half a year has passed and Hashkey is still in the process of financing.
On the whole, Hashkey has a relatively broad business layout, and Dr. Xiao Feng of Hashkey has enough influence in the circle. Although he has made great achievements in investment, from the "relatively casual" investment institutions to the entrepreneurial exploration of exchanges that focus on operations, and the recent joining of former Huobi non-compliant platform executives and Ant Financial payment business executives, whether the exchange will bear fruitful results after the formal operation of compliance is officially started, it still needs to be verified in the next year.
(III) HKVAX, the original Pioneer Coinsuper team, is rumored to be backed by mining capital
On August 8, the Hong Kong Virtual Asset Exchange (HKVAX) was awarded the Hong Kong Securities and Futures Commission (SFC)Approval in Principle, can carry out the first and seventh types of regulated activities (virtual asset 1&7 licenses), and will become the third licensed virtual asset trading platform in Hong Kong. It took HKVAX three years from the time it applied for the license to the present. It is expected that it will take at least another six months to officially obtain the license. It plans to launch virtual asset platforms, OTC over-the-counter transactions and other services by then.
In terms of business, HKVAX's core products include 2B services + 2C retail services:
1. Customized trading services between fiat currencies (such as USD or HKD) and virtual assets (such as BTC, ETH, and USDC)
2. An institutional-level trading platform established for professional investors, providing virtual asset and security token trading; providing listing regulations and guidance services for virtual assets and security tokens; and liquidity services.
3. Provide 100% protection for customers’ virtual assets; hot and cold isolated wallets with both physical and network protection.
TeamAccording to the official website, the HKVAX team combines the technical experience of top international traditional financial institutions, many years of encrypted asset trading platforms, and domestic Web2 Internet platform. The three co-founders of HKVAX are CEO Wu Weiliang, COO Huo Zhaoliang and CTO Liu Cheng. The first two are local practitioners in Hong Kong, and the CTO comes from the Internet giant Ant Financial.
According to public information, HKVAX's CEO Wu Weiliang and COO Huo Zhaoliang were previously the CEO and compliance director of CoinSuper Premium, a crypto asset trading platform under the traditional Hong Kong financial group Pioneer Group. Prior to CoinSuper, CEO Wu Weiliang worked with top financial institutions including Morgan Stanley, JPMorgan Chase and Wanfang Asset Management, and served as the managing director of CITIC Futures International. COO Huo Zhaoliang focuses on compliance and leading license applications, and was previously the head of anti-money laundering compliance for HSBC Global Private Banking and Private Wealth Solutions in Hong Kong and Asia. CTO Liu Cheng has worked at Alibaba and Ant Financial, and also has extensive experience in financial product management and research and development of complex systems. He graduated from the University of Electronic Science and Technology of China.
CapitalAccording to official disclosures, HKVAX has conducted multiple rounds of financing since 2020. Insiders revealed that the shareholders behind HKVAX may be related to a mining group in southwest China and entertainment-related capital.
The HKVAX team has experience in operating traditional international financial institutions and crypto trading platforms for many years, as well as an Internet team background. They have relatively complete experience. We look forward to the platform officially opening around March 2024. It should become the third officially opened virtual asset trading platform in Hong Kong.
(IV) VDX, backed by Victory Securities, an international financial investment bank + Web3 Native + a large Internet team
VDX, namely Victory Fintech Limited, is a subsidiary of Victory Securities, a local brokerage firm in Hong Kong. VDX's main business is a virtual asset trading platform (VATP license application is pending), while Victory Securities' main business in the virtual asset industry is virtual asset brokerage business (it has been awarded virtual asset No. 1 license, brokerage business).
Business Level。胜利证券为香港第一家获颁虚拟资产牌照的本土券商，胜利证券近年在虚拟资产投资活跃，同时持有证监会1号（虚拟资产交易）、4号（虚拟资产咨询服务）及9号（虚拟资产资产管理服务） 牌照。胜利证券于2023年3月8日宣布与OSL建立战略合作，On August 8, it officially launched its virtual asset trading app, using OSL to provide underlying transactions.Currently, customers are only allowed to use legal currency to configure two types of crypto assets: Bitcoin and Ethereum.
Here is a brief introduction. In the traditional financial field, trading platforms and brokerage firms are two types of business forms. In the field of virtual asset trading platforms, when centralized platforms gradually become compliant and licensed, centralized trading platforms will focus on liquidity and transaction matching, while independent brokerage firms/independent brokers will directly serve retail investors on the C-end and become ecological partners of compliant and licensed virtual trading platforms. Centralized exchanges are no longer a monopoly of one company, and the upstream and downstream ecological chains are all-inclusive.
Based on the above background, VDX has positioned its core strategy as a trading platform that only does 2B business. This strategic choice is almost the same as the strategic transformation intentions of some current leading native Web3 trading platforms.
As for VDX, which is still in the process of applying for a license, when the businesses of the other five exchanges have fully covered 5B+2C retail customers,VDXThe biggest difference between our business and all the current licensed/application platforms is that we only provide 2B services, which is relatively focused.The core business will focus on providing Web3 SAAS cloud and liquidity solutions to cooperating financial institutions, allowing users to directly use virtual assets for deposit and withdrawal transactions, and making ecological layout in the native Web3 industry fund.
Team Level. VDX has a relatively diversified international financial investment bank + Web3 Native + Internet gene. According to people familiar with the matter, VDX CEO comes from the traditional financial circle, with more than ten years of high-frequency trading experience and seven years of experience in the virtual asset industry; COO has worked for Deutsche Bank and Accenture, and was previously an expert in virtual assets at the Hong Kong Securities Regulatory Commission. The two No. 7 ROs in the technical direction come from OSL and Web7 well-known exchanges respectively. In terms of compliance licenses, the chief compliance officer comes from OSL, and executive directors include Gao Juan, chairman of the Hong Kong Securities Association. Many other team members are from Tencent, Futu and Tiger Securities.
Capital levelAs a company with more entrepreneurial genes and a diversified team, VDX is deeply tied to Hong Kong local brokerage firm Victory Securities. Although it has not made public financing disclosures, according to reliable sources,Since VDX applied for a license in early 2021, it has received two consecutive rounds of millions of dollars in financing, including from first-tier US dollar funds.
VDX's strategy is more like a "startup" from 0 to 1, and it has more of the founder's style and genes. But at the same time, a licensed exchange in Hong Kong is a "continuously burning money" thing, and it needs more capital support to go further.
(V) HKbitEX, a star regular army of the Hong Kong Stock Exchange, focusing on STO and RWA
HKbitEX is one of the three major business units of Tykhe Capital Group. According to official introduction, Tykhe Capital's business is centered on tokenized assets, including capital markets and wealth management, virtual asset exchanges, and Web3 SaaS and technology research and development. The relevant businesses are supported by the regulated or compliant Web3 infrastructure of the group's subsidiaries.
Taiji Capital's capital markets and wealth management business is operated by Pioneer Asset Management Limited ("Pioneer") and ON1ON Custody. Pioneer is a licensed asset management company and the first company approved by the Hong Kong Securities and Futures Commission to conduct fund tokenization business. Pioneer is allowed to manage a portfolio of 100% virtual assets and provide advice on virtual asset investments.
ON1ON Custody is a Trust or Company Service Provider (TCSP) licensee with the Hong Kong Companies Registry.
The virtual asset exchange business is operated by Hong Kong Digital Asset Exchange Group Limited (HKbitEX).
Web3 SaaS and technology development business is operated by Atom 8 Financial Technology Co., Ltd. Atom 8 is the technology department of the group, providing Web3 SaaS services to traditional financial institutions such as banks and securities firms.
TeamGao Han, chairman of Taiji Capital Group, is also the founder of HKbitEX.Gao Han previously worked at the Hong Kong Stock Exchange, where he participated in the Hong Kong Stock Connect and Bond Connect., and participated in the formulation of HKEX's business strategy in Greater China. After founding HKbitEX, Gao Han recruited many former colleagues from HKEX to join. Before 2020, Shi Lin, co-head of the listing review group, joined HKbitEX as chief development director.
BusinessHKbitEX, like other trading platforms, provides comprehensive trading services for both 2B customers and 2C retail segments, and is also actively exploring STO.
On September 2023, 9, Taiji Capital announced the launch of PRINCE Token, which is the first real estate fund security token issuance (STO) for "professional investors" in Hong Kong, and the first fund tokenization fundraising model approved by the Hong Kong Securities Regulatory Commission. The fundraising target is about 10 million yuan, and the proceeds will be used to acquire five retail properties located in the tourist hotspot of Prince Edward in Kowloon. The details of the target properties have not yet been disclosed. If approved by the regulatory authorities, it plans to seek to list PRINCE tokens on the HKbitEX platform to achieve greater liquidity potential.
The entry fee for PRINCE tokens is HK$1000, which is much lower than the US$100 million normally required to invest in private real estate funds. By holding PRINCE tokens, investors can obtain the annual rental income generated by the relevant properties and benefit from the future appreciation of the properties.
Gao Han, Chairman of Taiji Capital, said that the issuance of the first STO in Hong Kong has brought revolutionary changes to the fundraising model of the real estate industry. Through Taiji Capital's Web3.0 financial infrastructure, a one-stop solution is provided from STO product structure design, tokenization, custody and token management. In addition, providing a secondary market can bring new opportunities for asset owners and investors.
Capital level.As HKbitEX applied for the license earlier, it is said that it had received a round of financing. There has been no public financing disclosure recently.
Relatively speaking, HKbitEX, which has the compliance genes of the traditional Hong Kong Stock Exchange, has demonstrated its financial compliance advantages. It is expected that its core advantages and business layout in the future will most likely be concentrated on traditional capital circles and physical assets. How to combine with the Web3 virtual asset track may be more combined with STO and RWA formats.
(VI) HK BGE, medical engineering entity transformation, former Hashkey executives are still testing the waters
HK BGE was established in 2021 to apply for a license and is a wholly-owned subsidiary of HKE Holdings (01726), a Hong Kong-listed company.
HKE Holdings was listed on the Hong Kong Stock Exchange on April 2018, 4, with a current market value of HK$18 billion. Its main business is to provide comprehensive design and construction services for hospitals and clinics in Singapore. Since May 22.89, HKE Holdings' business has crossed borders to establish a comprehensive fintech service platform for multiple asset categories (including but not limited to virtual assets, listed securities, listed bonds and alternative assets).
Team. According to public information, Lian Haomin, chairman of HK BGE's parent company HKE Holding, is 31 years old and is the founder of Monmonkey Group Holdings Limited ("Monmonkey Group"), a financial technology company that provides one-stop financial services. Monmonkey Group holds Hong Kong's traditional financial licenses 1, 4 and 9. Lian Haomin is also the chairman of Ever Royal International Limited, an overseas real estate investment. Lian Haomin participated in the Hong Kong Election Committee election in 2021 and was automatically elected. In 2022, he filed a petition for liquidation in the High Court against China Evergrande (03333), which attracted the attention of domestic media. It was speculated that he was the son of Lian Zhuozhao, known as the "King of High Seas Gambling", but this has not been confirmed.
HK BGE appointed Ouyang Jiannan as director and CEO in February this year. Ouyang Jiannan is one of the founding members of HashKey Digital Asset Group. He has served as HashKey's head of strategic planning since 2 and was formerly the chief operating officer of Hashkey Exchange.
Capital level.Since HK BGE is backed by a listed company, it is easier for it to raise funds than for start-up companies. It is also said that it has capital support from the entertainment industry.
HK BGE is a small Hong Kong-listed company testing the waters of Web3. CEO Ouyang Jiannan has experience in Hashkey strategic planning. His previous position at Hashkey Exchange has not been operating smoothly. Can HK BGE's application for a license on the exchange and virtual asset trading platform go smoothly? Whether its subsequent operations can stand out remains to be seen.
Advantage comparison: 2 licensed companies, 4 licensed companies, a fierce competition, each with its own characteristics
The business operations of the two licensed exchanges are on the right track and are relatively stable, and they are not short of money at the moment.The "New Big Four" in Hong Kong during the licensing processThere are still opportunities to enter the market and achieve rapid growth. Let me summarize it in one sentence.
OSL,The second generation of wealthy and compliant companies, the first licensed platform in Hong Kong, backed by three financial sponsors: BC Technology, Fidelity of the United States, and GIC of Singapore, is waiting for the global crypto market to rise. Although it is losing money, it is in a relaxed state and is actively exploring STO business.
Hashkey Exchange,We have been on the road of Web3 Native for eight years and have achieved brilliant results in the investment field. However, we are burdened with the responsibility of compliance and it is difficult to operate high-valuation capital. The team still needs to work hard to operate in a compliant exchange.
HKVAX,A trading platform supported by mysterious mining circle capital and entertainment capital, with a compliance team of former Hong Kong virtual exchange star executives, and a very stable style of doing things. Just do a good job in the OTC and capital channels of Hong Kong compliant virtual assets. Whether it is Bitcoin mining circle capital or traditional Old Money that has just entered the circle, it cannot bypass the first hurdle of the Hong Kong compliant trading platform license.
VDX,Although it applied for the license relatively late, its business is the only one among the six platforms that focuses on 6B transaction services. It obtained two rounds of financing in two years, which is relatively fast. The diversified international team has relatively comprehensive operational capabilities. It is also the only one that is deeply bound to local securities firms and tends to act in a stable manner.
HKBitEX,With the strong star resource advantage of the traditional Hong Kong Stock Exchange, it focuses on the differentiated strategy of traditional asset STO, is compliant and stable, can avoid involution in the Web3 stock, and will have the last laugh.
HK BGE,It has been a healthcare entity for many years and has only started to test the waters of transformation in 2021. I heard that he is the son of the king of high-sea gambling and is also said to have entertainment capital support. Perhaps it has not yet started to really exert its efforts and dedication.
We expect that Hong Kong's compliant virtual asset trading platforms can make breakthroughs and innovations in Hong Kong-specific businesses such as STO and RWA to empower the real economy amid mutual competition and continuous internal competition.and alsoProvide high-quality services that are the most compliant and solid bridge for Web2 people to enter the Web3 encrypted asset trading field.Lay the foundation for the next round of Web3 bull market and lead more people to gain wealth growth and greater entrepreneurial opportunities through the Web3 field.
In addition to compliant centralized trading platforms, we are also excited to see more innovations and implementations in the native Web3 industry of decentralized platforms such as DEX and DeFi.
