To regulate the crypto space in Hong Kong, a new legislation has been tailored which obliges crypto firms to follow a licensing regime. While a recent report examines relevant threats, respective changes have been made to the anti-money laundering laws of the island.
Lawmakers want to review a bill which aligns the crypto sector with the financial industry. The creators of the draft look to introduce licensing for virtual asset service providers (VASPs) and enrollment for dealers in precious metals and stones (DPMS). The objective is to use the force of law against tax evasion and counter-terrorism-based financing commitments on the businesses operating in the two sectors.
The new necessities for VASPs are practically identical to those that apply to conventional institutions in the financial services industry and they should meet comparable financial prerequisites, Andrew Leelarthaepin, crypto exchange Bitstamp’s (a crypto exchange) chief for Asia Pacific, noted in an article distributed by the South China Morning Post. As he would see it, that perceives crypto firms as a part of Hong Kong’s financial framework
“Put simply, VASPs can expect to be regulated to the same standard as our institutional clients. The law recognizes VASPs as peer organizations within the financial services sector.”
Alterations intended to govern the cryptocurrency market in Hong Kong have been introduced to the members of the Legislative Council of China’s special administrative region. The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, which was distributed in the government paper in June, needs their endorsement in just two readings to make it a law.
For instance, companies in the crypto sector that would like to launch a trading platform in the near future, would need to get a permit from the Hong Kong Securities and Futures Commission (SFC) and satisfy various other prerequisites. The proposition considers the recommendations of the Financial Action Task Force on Money Laundering (FATF) which sets the worldwide principles in the field.
As administrators plan to endorse the new regulatory structure, the most recent version of Hong Kong’s Money Laundering and Terrorist Financing Risk Assessment Report has given specific consideration to the threats and weaknesses in the crypto space. While recognizing their true capacities and expanding prominence, the report likewise features the weakness of virtual assets to different dangers and the difficulties they present for investor security.
The new regulation will give the SFC the power to make sure that virtual asset service providers follow trading policies set by the government. The Commission will likewise supervise the implementation of laws intended to forestall market manipulation among other things