SFC Type 1 & Type 7 — Virtual Asset Trading Platform

1. About the Hong Kong VATP regime

Hong Kong introduced a dedicated regulatory framework for Virtual Asset Trading Platforms (VATPs) on 1 June 2023, administered by the Securities and Futures Commission (SFC) under two pieces of primary legislation:

• Securities and Futures Ordinance (SFO, Cap. 571) — for any platform offering trading in virtual assets that meet the SFC's definition of a "security".
• Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO, Cap. 615) — as amended in 2022 to introduce the VASP licensing regime for platforms offering non-security virtual assets.

A platform serving both securities-classified and non-securities virtual assets — as we do — must hold both: SFC licences under the SFO and a VASP licence under the AMLO. bitexasia holds both. The dual-licence model is the SFC's stated default for any platform offering a meaningful range of tokens, since the security/non-security status of a token is not always fixed in advance.

2. Regulated activities

Under the SFO, the SFC licences platforms by reference to "Types" of regulated activity. bitexasia is licensed for:

• Type 1 — Dealing in securities. Authorises us to deal in tokens classified as securities under the SFO. Covers principal trading on our own book and agency execution on behalf of clients.
• Type 7 — Providing automated trading services (ATS). Authorises the operation of an electronic trading venue where buy and sell orders for securities are matched automatically. This is the licence that covers the order book, the matching engine, and the post-trade settlement pipeline.

SFC central registration number (CE Number) BNL128. VASP licence reference SFC/VASP/2024/047. Both licences are held by our Hong Kong-incorporated subsidiary, with the Responsible Officers and Licensed Representatives registered in the SFC public register.

3. Permitted services and customer eligibility

The combined Type 1 + Type 7 + VASP licence permits the following on our Hong Kong platform:

• Spot trading in eligible virtual assets — large-cap tokens with at least 12 months of post-launch trading history and inclusion in two acceptable indices, as required by the SFC's token-due-diligence guidance.
• Order types: market, limit, stop, stop-limit, and post-only on the venue.
• Custody of customer virtual assets on a fully segregated basis (see Section 5).

Customer eligibility: all Hong Kong customers are onboarded as either Retail Investors or Professional Investors, with a suitability assessment for retail. Per the SFC's guidance, certain higher-risk products (margin, derivatives, structured tokens) are restricted to Professional Investors only. Retail Hong Kong customers may only trade in spot virtual assets that the SFC permits for retail under the eligible-token framework.

4. Financial resources and segregation

SFC-licensed corporations are subject to the Securities and Futures (Financial Resources) Rules. For a Type 1 + Type 7 holder:

• Paid-up share capital: minimum HK$5,000,000.
• Liquid capital: minimum HK$3,000,000 or 5% of adjusted liabilities, whichever is higher.
• Insurance: we maintain a professional indemnity policy with a Hong Kong-licensed insurer in line with SFC expectations, covering errors and omissions plus cyber events.
• Customer money: held in segregated client accounts at SFC-approved authorised institutions (Hong Kong-licensed banks), reconciled daily.

5. Customer asset custody

Hong Kong customers' virtual assets are held under a fully segregated custody framework, in line with the SFC's Terms and Conditions for Persons Licensed by or Registered with the SFC for the Purpose of Operating a Virtual Asset Trading Platform:

• 98% of customer virtual assets are held in cold storage by an associated entity (a separate Hong Kong-incorporated subsidiary acting as custodian).
• 2% maximum in hot wallet for operational liquidity, with multi-party signing.
• Independent attestation of the segregation by an accredited public accounting firm — the most recent attestation is the quarterly proof-of-reserves.
• No rehypothecation of customer assets without explicit, informed consent — and Hong Kong retail consent for rehypothecation is not solicited.

6. AML / CFT obligations

As both an SFC-licensed corporation and an AMLO-registered VASP, we are subject to:

• The Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations and SFC-Licensed Virtual Asset Service Providers).
• Customer due diligence and enhanced due diligence requirements, including identification and verification at onboarding and on an ongoing basis.
• Ongoing transaction monitoring with rule-based and behavioural analytics, alerting to a dedicated AML compliance team.
• Suspicious Transaction Reporting to the Joint Financial Intelligence Unit (JFIU) where applicable.
• Travel Rule compliance for virtual asset transfers above HK$8,000, per the AMLO amendments effective 1 June 2023.

7. Reporting and oversight

Routine submissions to the SFC throughout the year:

• Monthly Financial Return (Form FRR-A) under the Financial Resources Rules.
• Quarterly Risk-Based Capital Adequacy Return for the VATP.
• Annual Audited Financial Statements within four months of financial year end.
• Annual Compliance Self-Assessment covering Type 1, Type 7 and VASP obligations.
• Material event notifications within the timelines specified in the SFC Code of Conduct (typically same day for material incidents).
• Ongoing inspections — the SFC conducts thematic and routine on-site inspections; the platform must be available for inspection at any reasonable time.

8. Licence verification

Both licences can be verified independently on the SFC's public register at apps.sfc.hk/publicregWeb:

• SFC Type 1 + Type 7 licence — search by CE Number BNL128 or by entity name.
• VASP licence — search by VASP reference SFC/VASP/2024/047.

The SFC also publishes the list of Responsible Officers for each licensed corporation; these are senior individuals personally accountable for compliance under the licence and visible on the public register.

9. Contact

Hong Kong regulatory enquiries and SFC-related counterparty diligence: compliance@bitexasia.com. Please specify "Hong Kong SFC" in the subject line. We respond within five Hong Kong business days. For licence-verification letters, include the requesting party's name, regulator (if applicable), and the use case.