Hong Kong has passed a new licensing regime for crypto exchanges that will subject providers to the same Anti-Money Laundering (AML) and counter-terrorist financing legislation that traditional financial institutions follow
See related article: Hong Kong financial service providers gear up for retail crypto traders
- The bill, passed on Wednesday, includes all virtual asset service providers and is set to come into effect from June 1.
- Once the bill is implemented, crypto exchanges looking to set up shop in Hong Kong will have to show an ability to perform due diligence on their customers to meet the city’s AML and anti-terrorism financing standards before being granted a license.
- On Wednesday, a report from Reuters also said that Hong Kong’s Securities and Futures Commission (SFC) plans to allow a select group of cryptocurrencies to be traded by retail investors who had been banned from access to digital assets in 2021.
- Last year, Hong Kong loosened some restrictions on crypto retail investors, and at its annual FinTech Week 2022 in November, financial authorities signaled a desire for Hong Kong to emerge as a digital assets hub.
- However, in the aftermath of the billion-dollar collapse of Sam Bankman-Fried’s FTX crypto exchange, there has been global pressure for regulators worldwide to crack down on the industry and protect retail investors.
- Elizabeth Wong, a senior official at Hong Kong’s SFC, said in October that the planned licensing regime would support the orderly and sustainable development of the digital asset space while balancing investor protection.
- During a discussion panel in December, Eddie Yue, chief executive of the Hong Kong Monetary Authority, said that the city was also working on crypto investor protection legislation and stablecoin regulations.