CMB International Securities Limited, a division of the China Merchants Bank (CMB) — one of China’s leading financial institutions — has inaugurated a cryptocurrency platform in Hong Kong.
As per a CMB WeChat announcement released on Monday, the bank has commenced providing virtual asset trading services. This launch follows the Hong Kong Securities and Futures Commission granting approval for the bank’s application for a virtual asset service provider license in mid-July.
CMB’s Hong Kong crypto exchange facilitates around-the-clock trading of Bitcoin (BTC), Ether (ETH), and Tether’s USDt (USDT) for eligible investors. Documentation issued by the bank specified that only professional investors qualify for crypto trading services.
China Merchants Bank stands as one of the nation’s largest financial entities, overseeing assets exceeding $1.7 trillion as of the end of March, according to Macrotrends data. The bank’s ordinary class A shares also boast a market capitalization of $153.16 billion.
Related: China intensifies efforts against stablecoin promotions, research, and seminars
Mainland China’s prohibition on crypto remains
CMB declared that it is the first Chinese bank–associated brokerage in Hong Kong to obtain licenses linked to virtual asset trading services. The bank also mentioned intentions to further merge conventional stock trading with digital assets and fintech solutions.
Nevertheless, in Shenzhen, China — the location of the bank’s headquarters — such services would be unlawful. The Chinese government prohibited crypto trading in 2017, causing significant sell-offs at that time.
Since then, Chinese authorities have consistently treated crypto trading as unlawful in mainland China, prompting some market participants to devise inventive solutions. Still, Hong Kong functions under its own regulations within China’s “one country, two systems” framework, and is progressively establishing itself as a regional crypto center.
Related: Animoca and Standard Chartered create stablecoin partnership in Hong Kong
Hong Kong: an emerging crypto center
Hong Kong authorities seem to have prioritized crypto regulation as a key component of their policy agenda. On the first day of this month, the Hong Kong Monetary Authority (HKMA) concluded its regulatory framework for stablecoin issuers.
The adoption of the new regulations led to stablecoin companies operating in Hong Kong facing double-digit declines on Aug. 1 immediately following their implementation. Analysts at that time characterized the sell-off as a healthy adjustment, given the criteria for stablecoin issuers turned out to be more rigorous than anticipated.
The updated regulations will be introduced over a six-month transition phase starting from Aug. 1. The new Stablecoin Ordinance effectively criminalizes the provision or marketing of unlicensed fiat-referenced stablecoins to retail investors. Local authorities also established a dedicated public licensing registry prior to the new regulations coming into effect.
The Hong Kong Securities and Futures Commission has cautioned that the establishment of the new local stablecoin regulatory framework has heightened the risk of fraud. Last week, the SFC also released urgent guidelines regarding cryptocurrency custody standards, implementing extensive security requirements and a prohibition on smart contracts in cold wallet functionalities — a regulation that conflicts with existing practices at several prominent companies.
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