Hong Kong: Bill Involving Crypto In Effect From June 1, 2023

Lavina Daryanani
Source: Squadron London

Hong Kong’s Legislative Council passed an Anti-Money Laundering and Counter-Terrorist Financing amendment bill to introduce a licensing regime for virtual asset service providers [VASPs]. The bill also established a two-tier registration regime for dealers in precious metals and stones.

As such, anyone who engages in the virtual asset exchange business will have to apply for a license going forward. Elaborating on the same, the officially released statement noted,

“Under the amended Anti-Money Laundering and Counter-Terrorist Financing Ordinance, any person who engages in virtual asset exchange business is required to apply for a license from the Securities and Futures Commission (SFC).”

Also Read: SEBA Crypto Bank ventures into Hong Kong

Furthermore, the relevant participants will have to fulfill the “fit and proper test.” Alongside this, they will have to comply with the AML/CTF requirements. The requirements entail customer due diligence, record keeping, and investor protection [such as safe custody of client assets, financial soundness, and avoiding conflicts of interest].

In addition, licensed VA exchanges and their wholly owned subsidiaries will have to “regularly” submit audited accounts and financial information to the SFC. Notably, the agency also has the power to enter business premises for inspecting and investigating when necessary.

Commenting on the essence of the amended bill, the Secretary for Financial Services and the Treasury, Christopher Hui, said,

“The amended Ordinance establishes an effective AML/CTF regulatory regime and fulfills the relevant international obligations. This in turn strengthens Hong Kong’s status as an international financial centre. For VA exchanges, a comprehensive and balanced regulatory framework can protect investors and promote responsible and sustainable industry development.”

As such, the amended bill will come into effect in the second quarter of 2023. Chalking out the specific date, the statement highlighted,

… the licensing regime for VA service providers as well as other amendments on AML/CTF requirements, will take effect on June 1, 2023.

Furthermore, transitional periods will be provided to industry players to give them sufficient time to apply for a license or undergo registration in accordance with the regulatory regime.

Also Read: Is Hong Kong the next Bitcoin hub?

State of Affairs in Hong Kong

Hong Kong has consistently been making it to crypto headlines. Companies from different parts of the world have been spreading their wings heading toward Hong Kong. Switzerland-based SEBA Bank recently revealed the opening of a new Hong Kong office to serve global institutional clients. The said initiative was a part of the crypto bank’s Asia-Pacific expansion.

Hong Kong also revealed that it’s relaxing the existing crypto regulation in order to pave the way for retail investors. Moreover, the SFC is also reportedly set to roll out a public consultation on enabling retail investors to potentially trade crypto. The said measures are a part of Hong Kong’s aim to rebuild its reputation as a key financial center.

Read More: Hong Kong could legalize retail investor crypto trading via public consultation