Hong Kong’s securities regulator has approved the city’s third cryptocurrency exchange, the first to be licensed under a two-year-old virtual-asset regulatory regime that has so far struggled to gain traction.

Hong Kong Virtual Asset Exchange on Thursday obtained a licence for its trading platform HKVAX, according to an updated list on the Securities and Futures Commission (SFC) website.

With its expertise in security token offerings (STO) and real-world asset (RWA) tokenisation, HKVAX aims to offer over-the-counter trading, exchange and custody services, the company said in a statement published on Friday.

The licence “demonstrates Hong Kong’s resolve to lead in the virtual-asset industry”, while HKVAX aims to establish the city as “the STO and RWA centre for Asia and beyond”, co-founder and chief executive Anthony Ng said in the statement.

The company’s trading platform and onboarding system are still “undergoing final preparations”, the company said in a notice on its website.

Founded in 2018, HKVAX is among nearly 30 companies that have applied for a Hong Kong cryptocurrency exchange licence, which was created last year as part of the city’s pledge in late 2022 to build up its virtual-asset sector.

The new licence granted to HKVAX appears to put on track the Hong Kong government’s efforts to revive interest in cryptocurrency exchanges for retail investors, burnishing the city’s credentials as a virtual-asset hub.

The regulator’s stringent requirements for operators, which require significant investments in both time and capital, had forced out a range of globally popular platforms, leaving few options for local investors.

Before the SFC’s approval for HKVAX, local cryptocurrency firms HashKey Group and OSL were the only operators allowed to serve retail customers. The two companies, already licensed to offer cryptocurrency trading services to professional investors, saw their licences upgraded in August last year.

People seen entering HashKey Group’s booth during the Hong Kong Web3 Festival in April. Photo: Handout alt=People seen entering HashKey Group’s booth during the Hong Kong Web3 Festival in April. Photo: Handout>

Of the 16 remaining applicants being reviewed by the SFC, 11 platforms have been designated as “deemed to be licensed” – a status that allows these enterprises to continue operating in Hong Kong, while pursuing final approval from the regulator.

Apart from Ng, HKVAX co-founders include chief operating officer Sam Fok, who boasts a background in compliance and risk management, and chief technology officer Simon Liu, who previously worked at Alibaba Group Holding and its fintech affiliate Ant Group, according to the HKVAX website. Alibaba owns the South China Morning Post.