To accommodate the cryptocurrency business, Hong Kong’s legislative council has proposed a new amendment to the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022.
The Act would effectively establish a licencing structure for providers of virtual asset services.
Licensing in Hong Kong Regarding VASPs
VASPs intending to establish a business in the area will now be required to go through a licencing process that complies with AML rules and investor protection legislation According to Colin Wu’s report, failing to do so may result in a $5 million fine and 7 years in jail.
Another component of the new regulations is a crackdown on false cryptocurrency ads. Meanwhile, fraudulent and misleading crypto transactions may result in fines of $10,000,000 and ten years in jail.
The new licencing system will take effect in June of next year.
Despite the fact that the FTX crash sent shockwaves throughout the industry, Hong Kong has been rather positive in the sector.
Making Retail Crypto Trading Legal
Earlier this year, the Hong Kong government intimated that it might implement a required licencing regime for crypto platforms, allowing retail crypto trading. The previous worldwide headquarters of crypto firms such as Amber Group, Binance, FTX and Q9 Capital want to recast themselves as a worldwide cryptocurrency hub.
Three asset management firms – Mirae Asset Global Investments, Samsung Asset Management and CSOP Asset Management– recently filed ETF applications to Hong Kong’s Securities and Futures Commission (SFC). The submission came after the SFC said that individual investors might be able to trade in virtual asset-linked ETFs.