On September 22, 2023, Accumulus Financial Technology (Hong Kong) Company Limited, wholly owned by Accumulus GBA Technology (Hongkong) Co., Ltd. (“Accumulus [Hong Kong]”), was officially granted a Trust or Company Service Provider (TCSP) licence by the Companies Registry. According to Article 10.1 of the Guidelines for Virtual Asset Trading Platform Operators issued by the Securities and Futures Commission (SFC) of Hong Kong, a Platform Operator should only hold client assets on trust for its clients through its Associated Entity. At the same time, it is stipulated that a Platform Operator must obtain a TCSP licence before carrying out the trust or company service business in relation to virtual assets. We believe that the secure and proper custody of client assets is essential to developing the virtual asset industry, and regulators require trading platforms to become independently-operated, licensed custodians open to supervision in this pivotal segment. We are grateful for the regulatory guidance and user support, which continuously motivates us to deepen our understanding of the industry development and user expectations.

Industry regulation stresses building a solid defense line to secure client assets. In Hong Kong, TCSP licensees are permitted to provide fund and asset custody services for clients under supervision, including the custody of virtual assets. The licensing regime was put in place to supervise licensees’ operations under the city’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance, cracking down on flows of illegal funds and protecting investor interests. With regard to the core purpose of safeguarding client asset security, Hong Kong regulators have built three safety nets: the TCSP licensing regime as the first one, the stringent requirement imposed on trading platforms of a 98% threshold for client assets held in cold storage as the second, and a refined insurance/compensation mechanism as the third, which details a 100% coverage of the potential loss of client assets stored online. The three safety nets together constitute a sound and rigorous regulatory system for client asset protection.

Virtual asset regulation is part of the bigger picture of financial regulation. Julia LEUNG Fung Yee, CEO of the SFC, emphasizes that the “same activity, same risks, and same regulation” principle should underpin the regulatory framework for virtual assets. Most challenges facing the virtual asset industry are nothing new; hence, the established regulatory rules also apply. Taking the TCSP licensing regime as an example, the regime has played an active role in the traditional finance industry by standardizing trust services, protecting user interests, and stabilizing the market. When it comes to the virtual asset industry, it can also promote the compliance of client asset custody. Recognizing the “same activity, same risks, and same regulation” principle, we keep reflecting on existing practices and methods and find many still valuable. For example, there are clearly-put measures on data backup and redundancy for disaster recovery to ensure business continuity. Meanwhile, we have a sober knowledge of the new challenges brought about by decentralization and the high mobility of virtual assets, as exemplified by the difficulty of tracing assets caused by anonymity. Healthy industry development can only be achieved with a thorough understanding of the business and continuous efforts of system improvement and technical optimization.

We make every effort to safeguard client assets and provide long-term stable services.