on 29 Apr 2022
How OSL, Hong Kong’s first SFC licensed digital asset platform, brings genuine trust and security to professional investors entering this disruptive market
There is a growing overlap between the luxury yacht and cryptocurrency spaces, as both have become ubiquitous symbols of wealth, freedom, and innovation. In addition, vast crypto fortunes have birthed a brand new generation of yacht owners.
Notably, the most lucrative NFT (non-fungible token) collection in the world, with a valuation of more than US$1 billion, is called The Bored Ape Yacht Club.
But investing in cryptocurrency can be intimidating to new investors, even those who have succeeded in traditional fields. After all, who would want to invest in speculative, volatile digital assets built around technology that they don’t understand?
Still, the fact remains that Bitcoin and Ethereum are the two largest and most liquid cryptocurrencies of all time. Bitcoin would have ranked eighth largest market cap in the world if it was a company, behind only the likes of Google, Apple and Microsoft. And there are tremendous opportunities to invest in other blockchain-centred projects like NFTs, the metaverse, Web3 applications, and DeFi trading protocols.
However, the crypto space can be volatile and risky. For every story of an investor who rose from rags to riches through crypto, there is another of somebody who lost it all by investing recklessly. So, traditional investors may prefer to stick to what they know – whether that be stocks, bonds, index funds, real estate or auction collectables. After all, these industries are regulated and have security protocols in place to protect investors from fraud and other forms of financial crime. Meanwhile, there are countless stories of cryptocurrency exchanges getting hacked for millions of dollars with no way to recover investors’ lost assets.
This landscape has since changed.
OSL allows institutional investors and financial institutions to invest in digital assets with as much security as any other traditional broker or trading firm. They are the first and only digital asset platform to be granted types 1 & 7 digital asset licenses by the Hong Kong Securities and Futures Commission (SFC), and its parent company is publicly listed, “Big Four” audited and secured with institutional-grade technology.
“We play a very unique role in that we think we are top of the market in terms of safety, security and convenience,” says Hong Kong-based Managing Director and Head of OSL Digital Securities, Jean-David Péquignot. “Our platform supports investors who are used to the traditional finance world and want to find an equivalent in the digital assets world. They want the same amount of governance, security, safety, insurance, regulation – and we provide them with that.”
OSL has strategic partnerships with different regulated banks and investment funds, including Standard Chartered, DBS, GIC, and Fidelity International. As such, the firm is fully integrated into the Hong Kong banking system.
“When you first start out investing in digital assets, you want to be able to take some US or Hong Kong dollars from your bank account and safely bring that into a trading platform like ours. Various other exchanges will ask investors to transfer funds using credit cards with high fees or into foreign bank accounts, but with us, there is no friction nor delay. You have your assets or fiat currencies held in fully customer-segregated accounts. It’s not somewhere in a little-known overseas jurisdiction, or part of a liquidity pool with uncertain governance,” Péquignot says.
Another feature that sets OSL apart from its competitors is its insured custody, which protects investors’ digital assets stored at OSL accounts from hacks and cyber-attacks. “We insure at least 95 per cent of every digital asset we are holding for customers, regardless of amount. Most others provide very limited insurance – sometimes 20 per cent or less – in case of hacks or exploit; the difference is often in the fine print,” says Péquignot.
According to Péquignot, OSL has extremely stringent protocols, as they ensure every coin in the OSL wallet has not been involved in hacks, money laundering, or any illicit activity. Each asset must reach a minimum threshold of ‘coin purity’ by tracing previous transactions on the blockchain using automated software solutions.
“These are things that retail investors may not consider, but if you’re a regulated bank or a multi-billion-dollar asset manager, you are concerned about these types of issues. You don’t want to run the risk of your asset being tainted and possibly seized by authorities because it was involved in some criminal activity,” Péquignot says.
The firm also does its due diligence in deciding what coins to offer on its platform. One reason being the digital asset space has a reputation for being so risky is the number of scam coins and low-quality projects. There are thousands of crypto assets with new ones coming out every day, so it’s nearly impossible to know which ones are legitimate without doing sufficient research.
OSL looks at the market cap, liquidity, and trading volume of a coin before putting it on the platform. It will also heavily research things like the underlying technology and the legitimacy of the team behind each project. They will also offer coins that are in high demand from clients. OSL’s Hong Kong clients are all professional investors, with a minimum net worth of HK$8 million (approximately US$1.03 million), and do understand investment opportunities and associated risks.
The digital asset market has been surprisingly resilient so far during the tumultuous year of 2022. Institutional adoption continues, and new markets are embracing innovation, such as Brazil and recently Australia, where Crypto ETFs have started to list, as the space continues to see increased regulation and maturity.
“It’s happening,” Péquignot says of the digital assets’ mainstream adoption. “No one is really leaving the market, there are just more people learning and investing. The numbers show this. Increased regulation means high-level investors that were on the sidelines are entering because now it is possible to invest in a safe way with professional outfits.”
One thing is for certain: for high-net-worth investors and financial institutions in Asia, there is no safer or more professional outfit than OSL.
Disclaimer: For important risks disclosures, warnings and terms and conditions, please refer to www.osl.com