The new legislation will introduce a licensing system for suppliers of virtual asset services, requiring them to adhere to strict anti-money laundering standards.
The Legislative Council of Hong Kong has approved an update to its anti-money laundering (AML) and terrorist financing system that now includes providers of virtual asset services.
The most recent law will create a new licensing system for service providers of virtual assets, which is scheduled to take effect on June 1, 2023. With the new amendment, crypto exchange service providers will be governed by the same laws as conventional financial institutions.
This implies that before receiving a license to operate, virtual exchanges seeking to establish a business in Hong Kong will be subject to stringent AML regulations and investor protection rules. Hong Kong's regulators, in contrast to most others around the world, have exploited the FTX collapse to reduce the regulatory risks connected with centralized exchanges.
Regulators from all around the world have come under fire from the public for failing to protect small investors in the wake of the collapse of the FTX cryptocurrency exchange. There has been an increase in the desire to regulate cryptocurrency exchanges and service providers, subject them to stringent AML standards, and ensure investor safety.
Hong Kong to Serve as China's Cryptocurrency Proxy
Eddie Yue, the chief executive of the Hong Kong Monetary Authority, made the suggestion that the country may soon adopt investor protection regulations during a recent conference. The nation has taken the lead in addressing the urgent problem of investor protection thanks to the most recent legislative amendment.
Hong Kong has been actively working to create a sound regulatory foundation for the emerging cryptocurrency market. Under the heading "Policy Declaration on the Development of Virtual Assets," the Hong Kong government released a statement in October proposing a regulatory framework and risk-based regulatory direction. For the purpose of assessing and enhancing the technologies supporting virtual assets, the government has proposed a number of pilot projects.
Disclaimer: The information provided in this section doesn't represent any investment advice or FAMEEX's official view.