Hong Kong SFC Places Crypto Exchanges on Discover With New Laws

• Hong Kong units a 12-month transition for the brand new VATP licensing regime.
• VATPs have to show a major native presence below new guidelines.
• Non-compliance with new rules could result in prison prices.

Hong Kong is strengthening management over its digital asset buying and selling platforms (VATPs), making ready for a 12-month transitional part that started on June 1, 2023. The brand new regulatory system is concentrated on countering cash laundering and terrorist funding, in keeping with a round launched by the Hong Kong Securities and Futures Fee (SFC).

Current VATPs have till Could 31, 2024, to adapt to the brand new guidelines and should present a considerable presence within the area, with particular standards akin to a bodily workplace, native administration, and significant personnel stationed in Hong Kong. The SFC, nevertheless, made it clear that mere firm registration or fictitious operations gained’t go the eligibility take a look at.

Platforms participating in safety token buying and selling providers face totally different rules below the Securities and Futures Ordinance. Such VATPs should purchase the related license earlier than operations can start. The SFC’s round, nevertheless, applies solely to platforms providing non-security token buying and selling providers.

The round grants leeway to these VATPs already energetic in Hong Kong earlier than the June 2023 cut-off. These platforms can proceed to function through the transition interval with out violating the licensing rules, supplied they work in direction of acquiring the required license.

New VATPs aiming to kickstart operations within the city-state aren’t afforded the identical luxurious. They need to safe their license first or face prison prices for unauthorized actions. This rule additionally applies to people performing regulated roles for such platforms.

As a closing lifeline, the SFC has arrange a ‘Determinative Association’, permitting VATPs and their proposed managers or representatives assembly sure situations to proceed operations from June 1, 2024, whereas their license functions are nonetheless below evaluate.

In latest months, Hong Kong has witnessed important developments within the crypto house, indicating the rising curiosity and adoption of digital belongings. An announcement by Monetary Secretary Chen Maobo final week mirrored the federal government’s recognition of the potential of Web3 and digital belongings and its dedication to fostering accountable progress within the sector.