The Hong Kong government last week launched a consultation on the proposed new rules, aiming to strengthen anti-money laundering and counter-terrorist financing regulation.
The consultation includes the introduction of a licensing regime for virtual asset services providers; a registration regime for dealers in precious metals and stones, and some technical amendments under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
The new regime will make it compulsory for all cryptocurrency platforms to have a licence. The consultation is open until January 31.
According to Securities and Futures commission (SFC) chief executive officer Ashley Alder’s speech at Hong Kong fintech week, “successful applicants would be subject to expectations covering their financial resources, experience and the soundness of their business and risk management”.
He said that all virtual asset-trading platforms in Hong Kong would be regulated, supervised and monitored under the existing opt-in framework or the proposed new licencing approach, once the new regime approved.
Paul Haswell, a technology expert at Pinsent Masons, the firm behind Out-Law, said “The restriction on retail investors trading in cryptocurrencies is to be welcomed, since a large number of investors misunderstood the volatility of crypto and correspondingly became disgruntled with their performance, but the licensing of exchanges and platform providers is more interesting. “
“Cryptocurrencies have existed in something of a grey area in Hong Kong for some time, with talk of regulation rife for the last five years. Such regulation will also likely be against the backdrop of China’s own state-run digital currency, so Hong Kong will want to ensure any rival digital currencies are subject to oversight.” he said.
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