Hong Kong‘s markets regulator has agreed in principle to issue a licence to cryptocurrency firm OSL Digital Securities, a unit of Fidelity-backed BC group, the company said in an exchange filing on Friday.
OSL said last November it had become the first firm to apply for a digital asset licence from Hong Kong‘s Securities and Futures Commission (SFC) under new rules allowing crypto exchanges to opt into regulation. No other company has so far said it has received such approval.
Financial regulators worldwide have been debating whether and how they should regulate the cryptocurrency or virtual asset industry.
OSL, and some of its competitors, say they welcome regulation in order to make it easier to provide services to financial institutions wishing to trade cryptocurrencies.
BC Group CEO Hugh Madden said that one benefit of being licenced was that regulated institutions would be able to reduce their risk by being able to engage with other regulated entities.
BC Group provides business park and advertising services as well as its cryptocurency business, which accounts for the bulk of its revenues. It made a net loss of 90.8 million yuan ($13.13 million) in the first half of 2020, according to its interim results.
Final approval is subject to certain conditions, the filing said, without identifying them. Madden said that these were “as you’d expect from a conservative regulator in a financial hub.”
Other Asian regulators are also looking to regulate cryptocurrency companies.
Singapore is in the process of bringing in licencing for digital asset companies, and some exchanges have chosen to apply for licences there rather than Hong Kong as the rules are less prescriptive.
Japan’s Financial Services Agency already licences some cryptocurrency exchanges.