Hong Kong equates crypto companies with traditional financial institutions

From June 1, 2023, a new licensing regime will be established for virtual asset service providers

08.12.2022 - 12:00

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What’s new? Hong Kong’s Legislative Council passed a new amendment to the Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) system for virtual asset service providers (VASPs). According to the authorities, cryptocurrency companies will be equated with traditional financial institutions in terms of their licensing regime. The bill will take effect on June 1, 2023.

Link to document

What else does the document say? Crypto exchanges wishing to start operations in Hong Kong must be checked for compliance with strict AML requirements and investor protection laws before the Securities and Futures Commission (SFC) will grant them a license. Companies will also have to regularly submit financial information to the SFC.

In this, already operating exchanges will have a period of 9 months to apply to the SFC until December 1, 2023. Operating without a license faces a fine of up to 5 million Hong Kong dollars (~$640 550) and imprisonment for up to 7 years.

Earlier, G20 countries called “critical” the need to introduce international rules to regulate cryptocurrencies after the collapse of the FTX exchange to reduce the potential risks to the stability of the traditional financial system.

In November, Hong Kong’s leading crypto retail service provider, Genesis Block, announced it would shut down its over-the-counter trading platform on December 10. The platform’s leadership decided to close all positions in order to restore some liquidity.

To find out how the legalization of digital assets in Hong Kong will affect the global crypto market, read GetBlock Magazine’s article.

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