Hong Kong Mulls Allows Non-Local Businesses to Apply for Crypto Exchange License
The Hong Kong government has said it is considering allowing companies incorporated elsewhere to apply for a cryptocurrency exchange license, but insists on banning retail investors from trading cryptocurrencies due to the risks.
The government has proposed to put in place a licensing regime for virtual asset service providers, meaning unlicensed cryptocurrency exchanges would be banned in the city in the future, according to legislative proposals published at the end of 2020 for public comment.
The proposals, aimed at strengthening anti-money laundering and terrorist financing regulations, indicated that only locally incorporated companies would be allowed to access the program.
However, the government will refine the proposal as some respondents suggested that local unincorporated businesses should also be allowed to participate in the scheme, a consultation conclusion report released Friday by the Hong Kong Financial Services and the Treasury Bureau read.
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Most respondents supported the introduction of a statutory licensing regime for virtual asset service providers in Hong Kong, as they recognized that the virtual asset industry is an emerging sector with significant money laundering risks. money and terrorist financing for the financial system, the report says.
The bureau insisted that retail investors should not be allowed to trade virtual assets “at least for the initial phase of the licensing regime,” while noting that many respondents took the opposite view.
“The requirement to limit the services of a VA (virtual asset) exchange to professional investors only is necessary to ensure an adequate degree of protection for the investing public,” he said.
The bureau said the Hong Kong Securities and Futures Commission will be the regulatory authority for the licensing regime.
The office will submit the proposals to lawmakers for consideration during the 2021-2022 legislative session, according to the report.
Those found guilty of running unlicensed cryptocurrency exchanges could face a fine of up to HK $ 5 million ($ 644,000) and imprisonment for up to seven years, according to the proposals.
Mainland China is also tightening the handles on cryptocurrencies. Friday, the main financial regulator urged crack down on Bitcoin mining and trading as part of financial risk control efforts. Tuesday, three financial sector groups Posted a joint notice prohibiting financial institutions and payment companies from directly or indirectly providing cryptocurrency services to customers, including accepting currency as a means of payment.
Contact reporter Guo Yingzhe ([email protected])
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