I. Application for Virtual Asset Exchange License
Virtual Asset Exchange (VASP): It can be used as a non-securities virtual asset brokerage exchange to provide virtual trading and clearing for institutional clients.
II. Requirements for Virtual Asset Exchange License
The application conditions for the Hong Kong Virtual Asset Exchange License are mainly formulated based on the relevant requirements of the Hong Kong Securities and Futures Commission. Based on the actual experience of Future Well License Compliance Limited, we summarize them as follows:
1. Safe custody of assets: Platform operators should hold customer funds and customer virtual assets in trust through a wholly-owned subsidiary. Platform operators should ensure that no more than 2% of customer virtual assets are stored in online wallets. Platform operators should not deposit, transfer, lend, pledge, re-pledge or otherwise buy and sell customer virtual assets (Defi is not allowed).
2. KYC-compliance requirements: combat money laundering/terrorist financing; avoid conflicts of interest; include verified virtual assets for sale; prevent market manipulation and illegal activities through written policies and monitoring measures; require platform operators to submit monthly reports to the SFC on their business activities; platform operators should also require customers to deposit funds into their accounts in advance and shall not provide any financial facilities to customers to purchase virtual assets.
3. Knowledge assessment mechanism: conduct knowledge assessment on investors. If a customer fails the assessment, the operator can only provide services to the customer after providing training to the customer.
4. Customer cap setting: The operator should also set a cap for each customer to ensure that the risk borne by the customer on virtual assets is reasonable according to the judgment of the platform operator, based on the customer's financial status and personal circumstances.
5. Token Inclusion and Review Committee: It should be composed of at least senior management members who are mainly responsible for managing major businesses, compliance, risk management and information technology. The Token Inclusion and Review Committee should report to the board of directors at least monthly.
6. Internal Control: Licensed platform operators should ensure that their internal control measures, systems, technologies and infrastructure are able to support and manage any specific risks involved in the relevant virtual assets.
7. Legal Opinion: Licensed platform operators should obtain and submit to the SFC a legal opinion or memorandum in the form of a legal opinion on virtual assets (except for virtual assets provided only to professional investors) and confirm that the relevant virtual assets do not fall within the definition of "securities" as referred to in the Securities and Futures Ordinance.
8. Insurance: Licensed platform operators under the Securities and Futures Ordinance must always purchase insurance, and the coverage must cover the risks involved in holding customer virtual assets in online storage and the risks involved in holding customer virtual assets in offline storage.
Financial soundness requirements:
1. Platform operators must always maintain a paid-up share capital of not less than HK$5,000,000 (i.e. the "minimum amount of paid-up share capital").
2. Required liquid capital means HK$3,000,000 or the basic amount defined in Section 2 of the Financial Resources Rules (whichever is higher).
3. The platform operator shall submit a return to the SFC for each such month within three weeks after the end of that month.
4. Its liquid capital falls below 120% of its required liquid capital.
5. Its liquid capital falls below 50% of the liquid capital stated in the most recent return submitted to the SFC under paragraph 6.5.
III. How to apply for a virtual asset exchange license
Application process for a virtual asset exchange license:
1. Company: Hong Kong registered company
2. Address: Hong Kong registered office, and obtain the owner's consent letter
3. Personnel: Two licensed responsible officers (RO) with virtual currency experience
4. Report: Provide an evaluation report. The applicant for a virtual asset trading platform shall appoint an external evaluation expert to evaluate its business and provide an evaluation report.
5. Capital: The registered capital must be more than 5 million, and the working capital must be more than 3 million.
6. Committee: Establish a token inclusion and review committee. The trading platform must establish a token inclusion and review committee to be responsible for token inclusion transactions, suspension, suspending and revoking token transactions.
7. Anti-money laundering: Establish an anti-money laundering system and anti-money laundering software.
8. KYC: Establish a special KYC service provider for virtual currency customers.
9. Custody: A wholly-owned subsidiary of TCSP is required.
10. Insurance: Purchase corresponding insurance to hedge risks.
11. Wallet: The Securities and Futures Commission requires trading platforms to use cold wallets to hold at least 98% of customer virtual assets online and offline, and the seeds or private keys should be stored in Hong Kong to minimize the risk of losses caused by platform intrusion or hacker attacks.
12. Audit: An auditor with virtual currency is required.
Future Well License Compliance Limited has many years of rich experience in licensing business and can handle the application or merger of relevant licenses on behalf of customers, saving customers' valuable time and energy. It is your loyal partner on the road to success.
IV. Apply for TCSP trust license and one-stop service
In the virtual currency sector, our company provides one-stop service for your company and can help the company apply for licenses in all aspects:
1. Virtual broker master license (SFC first-class license) - can be used as a virtual asset broker dealer to provide virtual brokerage trading services to retail investors
2.1 Virtual exchange master license (SFC seventh-class license) - can be used as a virtual asset broker exchange to provide virtual trading and clearing for institutional customers
2.2 Virtual exchange master license (SFC ninth-class license) - can be used as a virtual asset manager
3. Virtual asset custody service (TCSP trust or corporate service provider) - can be used as a virtual asset custodian
