Shalini Nagarajan

<div id="highlights-block_62a31e89db559" class="highlights">
 <ul>
 <li>Licensed crypto exchanges in Hong Kong are allowed to service professionals only</li>
 <li>Virtual assets are complex products that are likely not understood by retail investors, regulator says</li>
 </ul>
 
</div>



A partnership between two digital asset brokerages enables a new route for professional investors in Hong Kong to dabble in cryptoassets.



OSL, a Securities and Futures Commission (SFC)-regulated digital asset platform, has agreed to provide Interactive Brokers a platform to offer virtual asset services to its professional clients, according to an <a href="https://bc.group/press-release/osl-digital-securities-and-interactive-brokers-sign-agreement-osl-to-provide-exclusive-virtual-asset-services-for-interactive-brokers-in-hong-kong/" target="_blank" rel="noreferrer noopener">announcement</a> on Thursday.&nbsp;



In late 2020, OSL became the first firm <a href="https://www.prnewswire.com/news-releases/osl-receives-license-from-hong-kong-regulator-becomes-worlds-first-sfc-licensed-listed-insured--big-4-audited-digital-asset-trading-platform-301193081.html" target="_blank" rel="noreferrer noopener">to receive permission</a> from Hong Kong’s regulatory authority to provide a digital asset trading platform for institutions. It managed to get licensed after undergoing vetting requirements. Interactive Brokers’ partnership with the exchange highlights its weight in the market.



“Investors worldwide are rallying to digital asset markets, and the collaboration with OSL comes at a key moment in the development of the regulated digital asset ecosystem in Hong Kong,” David Friesland, head of Asia Pacific at Interactive Brokers, said in a statement.



In January this year, the Hong Kong Monetary Authority said only SFC-licensed financial institutions will be allowed to conduct the business. In a <a href="https://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2022/20220128e3.pdf" target="_blank" rel="noreferrer noopener">notice</a>, the regulator said virtual assets should be considered complex products that are not likely to be understood by retail investors. And so, they must be <a href="https://cms.blockworks.co/hong-kong-restricts-trading-of-crypto-etfs-to-professional-investors-only/" target="_blank" rel="noreferrer noopener">restricted to professionals</a>.



“Hong Kong has one of the world’s highest concentrations of institutional and professional investors, as well as a clear regulatory regime around digital assets,” Wayne Trench, OSL’s chief executive, said in a statement.



Hong Kong was a hotbed for some of today’s most well-known blockchain and crypto businesses including Crypto.com, BitMEX and Bitfinex. Popular stablecoin Tether too was <a href="https://messari.io/asset/tether/profile" target="_blank" rel="noreferrer noopener">launched</a> there in 2014. But strict regulations, including the rule that restricts services to professional investors, led some companies to jump to other markets.



The SFC recently <a href="https://cms.blockworks.co/hong-kong-securities-and-futures-commission-calls-for-regulation-of-nfts/" target="_blank" rel="noreferrer noopener">took aim</a> at non-fungible tokens, warning that if investors “cannot fully understand them and bear the potential losses, they should not invest in NFTs.&#8221; China’s <a href="https://cms.blockworks.co/no-china-didnt-ban-crypto-its-just-pushing-exchanges-offshore/" target="_blank" rel="noreferrer noopener">caveats</a> on cryptocurrencies have also muddled Hong Kong’s role as a hub for fintech innovations. 



Many crypto exchanges have applied to Hong Kong’s licensing agreement, but OSL has been the only successful one so far.

exchanges

Interactive Brokers Launches Crypto Trading Services in Hong Kong

Ben Strack

<div id="highlights-block_61e02acad3add" class="highlights">
 <ul>
 <li>The company’s recent $6 million seed round was co-led by Khosla Ventures and Kindred Ventures</li>
 <li>“Money should always be growing and money should always be spendable,” Seashell’s founder and CEO tells Blockworks</li>
 </ul>
 
</div>



Fintech company <a href="https://www.seashell.com" target="_blank" rel="noreferrer noopener">Seashell</a> has launched an app that offers up to 10% interest to users as it looks to grow further following a $6 million funding round.



The Seattle-based company has created Seashell Save, which allows users to transfer money from their bank accounts and start earning steady interest.



The offering provides up to 10% interest on the funds, and users can redeem money at any time without fees or penalties, the firm said in a Thursday announcement.



Daryl Hok, the former chief operating officer of <a href="https://www.certik.com" target="_blank" rel="noreferrer noopener">CertiK</a>, a smart contract auditing firm, created Seashell — named for one of the earliest forms of payment — to address issues he began to see materialize in the growing crypto market.



“Our approach of who we’re trying to target as our user base is not necessarily crypto people, because the bigger problem at hand is the inflation problem and the lack thereof of savings problem,” Hok told Blockworks in an email.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Real yields are able to be had, but the normal person doesn’t know how to do it.”</blockquote>



The average interest rate for savings accounts in the US is 0.06%, according to a recent survey of institutions by Bankrate.&nbsp;



Meanwhile, bitcoin and ether <a href="https://cms.blockworks.co/crypto-rallies-on-bad-as-expected-inflation-data/" target="_blank" rel="noreferrer noopener">saw gains Wednesday</a> following the release of December’s Consumer Price Index (CPI) data. The CPI rose 7% year-over-year in December for all items, according to the <a href="https://www.bls.gov/news.release/pdf/cpi.pdf" target="_blank" rel="noreferrer noopener">report</a>. 



Seashell puts users’ funds ​​into a diversified strategy, investing it into assets like gold, as well as stablecoins, which attract borrowers who are willing to pay higher interest fees.



<h3 class="wp-block-heading">Seed funding&nbsp;</h3>



The company announced a $6 million seed funding round co-led by Khosla Ventures and Kindred Ventures. Other round participants included Coinbase Ventures, Vlad Tenev, Robinhood’s co-founder and CEO, Dallas Mavericks owner Mark Cuban, investor Elad Gil and J. Christopher Giancarlo, former chairman of the Commodity Futures Trading Commission.&nbsp;



“Smart savers should strongly consider using Seashell as a simple solution to beat rising prices,” Cuban said in a statement. “Due to inflation, prices have risen [7%] over the past year — the largest increase since 1982, leaving consumers searching for alternatives to bank interest rates, which have been trapped well below 1%.



Seashell has built the ability to access the best yields from a variety of blockchains, Hok said, noting that other investors in Seashell include the founders of Terra, Polygon, Avalanche and Solana.



The $6 million in funding will go toward additional hiring, as well as marketing and the development of potential future products, such as a direct deposit feature and budgeting tools, Hok explained.&nbsp;



“Our broader vision is to have a singular platform in which merchants and consumers are both on,” the Seashell founder added. “We want to enable two simple promises for money, which is that money should always be growing and money should always be spendable.”



<h3 class="wp-block-heading">Seashell’s competitors?</h3>



Seashell is looking to compete against the [non-crypto] neobanks, Hok said.



“When a consumer has moved to Chime, or another neobank, then they’re in search for higher yields,” he explained. Unfortunately, those yields aren’t actually high — they’re using the same financial system as old banks, and they’re just calling it ‘neo’ because they have fewer people involved and no physical presence.”



Unlike crypto-focused companies offering high yields, Seashell looks to appeal to the masses, as Hok noted that it does not have the word “DeFi” on its website.&nbsp;&nbsp;



“It doesn’t focus on decentralization or tokens or things that are a little bit complex to the normal user, but rather we want to have a good customer experience, good customer service, a very good mobile application,” he said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“As simple as Robinhood, as an example, for the masses, but now plugging into the benefits of crypto and DeFi.”</blockquote>



Unlike other high-yield products in the market, Hok added, Seashell is particularly focused on US compliance.



Though <a href="https://cms.blockworks.co/crypto-companies-brace-for-year-of-regulation-in-2022/" target="_blank" rel="noreferrer noopener">how regulation around digital assets will evolve</a> remains to be seen, Hok said some crypto companies may not be ready from potential harsher rules from regulators such as the US Securities and Exchange Commission (SEC) and the Office of the Comptroller of the Currency (OCC).



“We want to do the slow and steady, but legitimate approach,” he said, “so that we’ll always be available regardless of what happens this year on the regulatory side.”



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