Hongkong

Hong Kong, a significant financial center, has demonstrated growing interest in blockchain and cryptocurrency technology. Hong Kong&#39;s government supports the industry&#39;s growth, and several measures are ongoing to aid crypto and blockchain enterprises.Hong Kong&#39;s financial services regulatory framework attracts crypto and blockchain firms. HKMA projects assist blockchain and digital currency development. The HKMA created a blockchain-based trade finance platform and is creating a central bank digital currency (CBDC).Hong Kong&#39;s vibrant blockchain and cryptocurrency networks help companies and developers. Blockchain and cryptocurrency conferences in the city foster networking and industry development.The Hong Kong Legislative Council amended the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) in December 2022 to license virtual asset service companies (VASPs).Hong Kong now regulates bitcoin trading and services. The amended Anti-Money Laundering Law follows FATF Guideline 15, which requires virtual asset service providers (VASPs) to follow AML and CFT requirements. Hong Kong VASPs must now have a Securities and Futures Commission license (SFC). VA providers need a license to operate.The Hong Kong government strictly controls virtual asset (VA) services. VA services include offering virtual assets for sale or purchase regularly, resulting in a binding transaction; regularly introducing or identifying persons to other parties with the purpose of negotiating or concluding virtual asset transactions that are binding or with the reasonable expectation of doing so; and having direct or indirect control over client money or client virtual assets.Crypto trading platforms that trade securities and futures contracts are already regulated under the Securities and Futures Ordinance, therefore they are exempt from the new licensing framework. The new license rules apply to all crypto exchanges registered in Hong Kong under the Companies Law, including foreign exchanges that advertise to Hong Kongers.Unlicensed VA service providers cannot execute regulated duties under the modified Ordinance. Selling, administering, and custodial services for virtual assets are examples.Hong Kong prohibits unlicensed VA advertising. The SFC may punish and revoke unlicensed organizations.Hong Kong VASPs are affected by the new rules. VASPs must prove AML/CFT compliance throughout the arduous licensing procedure. The SFC monitors licensed VASPs.VASPs must disclose ownership, management, and risk management procedures while licensing. VASPs must do client due diligence and transaction monitoring to identify and report suspicious activity.VASPs that violate regulations risk penalties, license revocation, and reputational harm. The laws support a secure and stable virtual asset market in Hong Kong and safeguard investors and consumers. Hong Kong&#39;s new virtual asset services regulation helps VASPs and investors. First, the laws clarify Hong Kong&#39;s legal framework for virtual asset services. Clarity may attract more investors and enterprises. Second, virtual asset market laws enhance openness and accountability. Licensed VASPs must keep records, audits, and report questionable activity to authorities. These rules may curb market fraud.Finally, the restrictions level the playing field for Hong Kong VASPs. The licensing procedure guarantees all VASPs meet high standards and comply with regulations. This may make Hong Kong&#39;s virtual asset services industry more competitive and fair.The Securities and Futures Commission licenses crypto companies. The company must pass a &#34;fit and appropriate&#34; examination that includes criminal background checks, AML/CFT performance history, financial standing, educational or other credentials, reputation, experience, character, dependability, and financial integrity of the individual to receive a license. The firm must apply for premises permission to store Ordinance-required records. Each candidate director and owner must be &#34;fit and suitable&#34; to provide VA services.The new Law requires regulated crypto firms to implement AML/CTF procedures include customer due diligence, transaction monitoring and record-keeping, screening customers against international sanctions and PEP watchlists, and screening clients in unfavorable media. After becoming licensed providers, they must comply with Travel Rule criteria and hire an appropriate auditor within one month. They must also compile financial statements and other documentation for designated periods and submit them with the auditor&#39;s report to the Commission within four months of the financial year&#39;s end.The licensed provider must submit an annual return to the Commission and pay a charge within one month of each license anniversary. Lastly, the licensed person or ultimate owner must notify the Commission in writing of any change in information supplied under the Ordinance, including desire to cease business or change the place at which it wants to perform VA services. The SFC may punish licensed VASPs for AML/CTF and regulatory compliance. Senior management of unlicensed businesses may be imprisoned. Virtual asset fraud may result in 10,000,000 HKD (1,277,000 USD) penalties and 10 years in jail.New rules take effect on April 1, 2023. On June 1, 2023, license requirements take effect. Companies should begin preparing for the new legislation by assessing existing AML/CTF policies and processes to detect weaknesses. These new laws are likely to attract more institutional investors to the Hong Kong bitcoin sector by boosting industry safety and credibility. Hong Kong&#39;s cryptocurrency legislation now match worldwide best practices.Since 2019, numerous events have affected Hong Kong and its inhabitants. Protests, the COVID-19 epidemic, national security regulations, and political upheavals have plagued Hong Kong. The city&#39;s crypto agenda should advance. Hong Kong can remain a financial leader by adopting new technology, safeguarding investors, and encouraging openness.

Op-ed: How Hong Kong’s Stricter Crypto Regulations Aim to Boost Investor Confidence

ItsBitcoinWorld

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