2 years ago
The pursuing is simply a impermanent station from Anndy Lian.
Hong Kong has been a large fiscal hub for galore years, and successful caller years, it has shown expanding involvement successful blockchain and cryptocurrency technologies. The authorities of Hong Kong has indicated its enactment for the industry’s development, and galore initiatives are underway to assistance make a favorable situation for crypto and blockchain businesses.
Hong Kong has a well-established regulatory model for fiscal services, which has helped pull galore crypto and blockchain companies. The Hong Kong Monetary Authority (HKMA) has launched respective initiatives to enactment the improvement of blockchain and integer currencies. For example, the HKMA is moving connected processing a cardinal slope integer currency (CBDC), and has besides launched a blockchain-based commercialized concern platform.
Many progressive blockchain and cryptocurrency communities successful Hong Kong supply enactment and resources for businesses and developers successful the industry. Many events and conferences related to blockchain and cryptocurrency successful the metropolis assistance make networking opportunities and beforehand the industry’s growth.
In December 2022, the Legislative Council of Hong Kong passed an amendment to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), introducing a licensing authorities for virtual plus work providers (VASPs).
Hong Kong’s New Regulatory Framework
Hong Kong has precocious implemented caller regulatory frameworks for cryptocurrency trading and services. The updated Anti-Money Laundering Ordinance is successful enactment with the Financial Action Task Force (FATF) Recommendation 15, which requires virtual plus work providers (VASPs) to adhere to anti-money laundering (AML) and countering the financing of coercion (CFT) regulations.
The caller regulations necessitate each VASPs operating successful Hong Kong to get a licence from the Securities and Futures Commission (SFC). Without a license, individuals and businesses cannot connection VA services oregon state themselves arsenic a provider.
The Hong Kong authorities intimately regulates each activities related to the proviso of virtual plus (VA) services. The word “VA services” encompasses a wide scope of physics services that include, but are not constricted to:
- (a) Offering virtual assets for merchantability oregon acquisition regularly, resulting successful a binding transaction; regularly introducing oregon identifying persons to different parties with the intent of negotiating oregon concluding virtual plus transactions that are binding oregon with the tenable anticipation of doing so;
- (b) Possessing nonstop oregon indirect power implicit lawsuit wealth oregon lawsuit virtual assets successful the proviso of specified services.
It is important to enactment that crypto trading platforms that let trading successful fiscal products specified arsenic securities and futures contracts are not taxable to the caller licensing regime, arsenic they are already regulated nether the Securities and Futures Ordinance. Another happening to enactment is that the caller licensing requirements widen to each crypto exchanges registered successful Hong Kong nether the Companies Ordinance, including those based extracurricular of Hong Kong that actively people Hong Kong citizens successful their selling efforts.
Prohibition connected Unlicensed VA Service Providers
The amended Ordinance besides prohibits unlicensed persons from performing regulated functions related to the concern of providing VA services. Such functions whitethorn see the buying oregon selling of virtual assets, managing virtual plus portfolios, and providing virtual plus custodian services.
Unlicensed individuals oregon businesses cannot advertise VA services successful Hong Kong. The SFC tin instrumentality enforcement actions against unlicensed entities, including issuing fines and revoking licenses.
Impact connected VASPs
The caller regulations person important implications for VASPs operating successful Hong Kong. The licensing process is rigorous and requires VASPs to show compliance with AML/CFT requirements. Licensed VASPs are taxable to ongoing supervision and monitoring by the SFC.
The licensing process requires VASPs to supply elaborate concern information, including ownership structure, absorption team, and hazard absorption systems. VASPs indispensable besides behaviour lawsuit owed diligence and transaction monitoring to observe and study suspicious activities.
VASPs that neglect to comply with the regulatory requirements whitethorn look terrible consequences, including fines, licence revocation, and reputational damage. The regulations purpose to beforehand a harmless and unchangeable virtual plus marketplace successful Hong Kong and support the interests of investors and consumers.
Benefits of the New Regulatory Framework
The caller regulatory model for virtual plus services successful Hong Kong has respective benefits for VASPs and investors. Firstly, the regulations supply clarity and certainty astir the ineligible and regulatory situation for virtual plus services successful Hong Kong. This clarity tin assistance pull much investors and businesses to the market.
Secondly, the regulations beforehand transparency and accountability successful the virtual plus market. Licensed VASPs indispensable support due records, behaviour regular audits, and study suspicious activities to the applicable authorities. These requirements tin assistance deter fraud and different illicit activities successful the market.
Thirdly, the regulations assistance beforehand a level playing tract for each VASPs operating successful Hong Kong. The licensing process ensures that each VASPs conscionable the aforesaid precocious standards and are taxable to the aforesaid regulatory requirements. This tin assistance make a much competitory and just marketplace for virtual plus services successful Hong Kong.
How to get the license?
Crypto businesses indispensable get a licence from the Securities and Futures Commission, the regulatory assemblage for securities and futures markets. To get a license, the concern indispensable walk a ‘fit and proper’ trial that involves transgression inheritance checks, AML/CFT show history, fiscal standing, acquisition oregon different qualifications, reputation, experience, character, reliability and fiscal integrity of the person. The concern indispensable besides use for support of the premises to support records oregon documents required nether the Ordinance. Additionally, each manager of the applicant and the eventual proprietor indispensable beryllium determined arsenic ‘fit and proper’ to beryllium associated with providing the VA service.
To conscionable the regulatory requirements of the caller Ordinance, licensed crypto businesses indispensable present AML/CTF measures, including lawsuit owed diligence, transaction monitoring and record-keeping, screening clients against planetary sanctions and watchlists for PEP status, and screening clients successful adverse media. They indispensable besides comply with Travel Rule requirements and name an eligible auditor wrong 1 period aft becoming a licensed provider. Furthermore, they indispensable hole fiscal statements and different documents for prescribed periods and taxable them with the auditor’s study to the Commission wrong 4 months aft the extremity of the fiscal twelvemonth to which they relate.
The licensed supplier indispensable besides taxable an yearly instrumentality to the Commission and wage a prescribed interest wrong 1 period aft each day of the license’s assistance date. Finally, the licensed idiosyncratic indispensable notify the Commission successful penning of immoderate alteration successful accusation that the licensed idiosyncratic oregon eventual proprietor has provided nether the requirements of the Ordinance, including intended cessation of concern oregon volition to alteration the code astatine which it proposes to supply immoderate VA service.
Final words
The SFC volition person wide powers to supervise AML/CTF and regulatory compliance by licensed VASPs, including imposing sanctions. Businesses that run without a licence oregon interruption AML rules tin look important fines and imprisonment for elder management. In the lawsuit of fraudulent activities oregon deception involving virtual assets, fines tin scope up to 10,000,000 HKD (1,277,000 USD) and imprisonment for up to 10 years.
The caller regulations volition travel into effect connected April 1, 2023. Some provisions, including licensing requirements, volition spell into effect connected June 1, 2023. Businesses are advised to commencement preparing for the caller regulations arsenic soon arsenic imaginable and reviewing their AML/CTF policies and controls to place imaginable gaps successful the requirements.
Overall, implementing these caller regulations is expected to pull much organization investors to the Hong Kong cryptocurrency market, arsenic they volition person greater assurance successful the information and legitimacy of the industry. The determination besides brings Hong Kong’s cryptocurrency regulations successful enactment with planetary standards and champion practices.
Hong Kong has experienced important events since 2019 that person had a large interaction connected the metropolis and its people. Hong Kong has faced galore challenges, from protests and governmental unrest to the COVID-19 pandemic to the instauration of nationalist information instrumentality and governmental changes. I anticipation the city’s caller crypto docket pushes a captious measurement forward. By embracing the opportunities of caller technologies, protecting investors, and promoting transparency, Hong Kong tin proceed to beryllium a person successful the planetary fiscal industry.
Some “#AnndyLian Food for Thought” earlier I extremity this article:
The Japanese authorities recognized aboriginal connected that allowing retail investors to enactment successful the cryptocurrency marketplace could assistance thrust adoption and beforehand innovation. My question is: “Will Hong Kong travel Japan’s attack to allowing retail investors to commercialized cryptocurrencies successful a regulated environment?”
This could beryllium 1 of their selling points. I americium anxious to find out.
The station Op-ed: How Hong Kong’s stricter crypto regulations purpose to boost capitalist confidence appeared archetypal connected CryptoSlate.
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