The new legislation, which aims to govern the cryptocurrency space in Hong Kong, will establish a licensing scheme for crypto service providers. The respective changes to the region’s anti-money laundering (AML) rules have been submitted to its legislature while a recently published report examines relevant threats.
Hong Kong lawmakers will examine a bill to align the financial sector and crypto sectors
Amendments designed to govern the cryptocurrency market in Hong Kong have been presented to the members of the Legislative Council of China’s special administrative region. Two readings are required to approve the Anti-Money Laundering and Counter-Terrorist Financing Amendment Bill 2022.
Draft authors propose licensing virtual asset service providers (VASPs), and registration of dealers in precious metals (DPMS). Businesses operating in these two areas will be subject to anti-money laundering, counter-terrorism financing and other obligations.
For example, entities working with cryptocurrency would need to get a license from Hong Kong Securities and Futures Commission and meet a few requirements to start a trading platform. It takes into consideration the Financial Action Task Force on Money Laundering recommendations (FATF), which set the international standards for the industry.
The new requirements for VASPs are comparable to those that apply to traditional institutions in the financial services sector and they will have to meet similar financial adequacy requirements, Andrew Leelarthaepin, crypto exchange Bitstamp’s managing director for Asia Pacific, noted in article published by the South China Morning Post. In his opinion, that recognizes crypto firms as a component of Hong Kong’s financial system. This was the executive’s explanation:
Simply put, VASPs will be treated the same as institutional clients. VASPs are recognized by law as peers in the financial sector.
In the future legislation, the SFC is also responsible for making sure that virtual asset services providers have proper listing and trading procedures as well financial reporting and disclosure requirements. Also, the Commission will oversee implementation of measures to protect market manipulations or conflicts of interest.
As legislators prepare to approve the new regulatory framework, the latest edition of Hong Kong’s Money Laundering and Terrorist Financing Risk Assessment Report has paid particular attention to the threats and vulnerabilities in the crypto space. Although virtual assets are becoming more popular, it also acknowledges the risks they face and provides information to investors about how to protect them.
Comment on how do you see the new regulations affecting the Hong Kong crypto market? Please comment below with your thoughts.
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