Hong Kong’s New Crypto Insurance policies Deal with Illicit OTC Crypto Commerce

• Hong Kong implements stringent regulatory norms to limit over-the-counter (OTC) suppliers.
• Whereas the OTC platforms play a big position in crypto transactions, they’re suspected of selling unlawful crypto actions.
• The brand new guidelines are anticipated to result in consolidation and a discount in using OTC platforms in unlawful crypto trades.

Hong Kong has reportedly initiated the implementation of stringent regulatory norms proscribing over-the-counter (OTC) suppliers in an try to cut back illicit crypto buying and selling actions. Chengyi Ong, APAC coverage head at Chainalysis, commented that the regulatory framework would result in “consolidation and a discount” in malicious actors’ use of OTC platforms.

In response to Chainalysis information, round 450 retailers, ATMs, and different on-line platforms throughout Hong Kong have been facilitating OTC crypto trades. Whereas these platforms play a significant position in digital transactions all through the town, they’re additionally suspected of selling banned crypto actions. Carlton Lai, Head of Blockchain Analysis at Daiwa Capital Markets, commented,

The decentralized nature of crypto makes the business very laborious to manage. There are quite a few crypto exchanges and apps primarily based offshore that customers can simply entry with out oversight from the federal government.

Fostering Hong Kong’s imaginative and prescient of building a crypto hub, the Monetary Providers and the Treasury Bureau started scrutinizing OTC crypto trades. The regulatory physique’s initiative centered on stopping cash laundering, terrorism financing, and fraudulent exercise. As per Ong, the novel OTC framework will assist to “higher handle crime, cybersecurity, and different operational dangers.”

The Monetary Providers and the Treasury Bureau devise the regulatory framework underneath the customs division. A spokesperson commented that the customs division is probably the most acceptable authority to scrutinize the OTC service suppliers. The foundations will necessitate these suppliers to mandate customer-record-keeping practices and strengthen the workforce.

Crypto advisor Vince Turcotte posited that OTC transaction regulation is a “pure extension” of the already current regulatory framework. Turcotte added, “The first influence might be to additional legitimize the market in Hong Kong.”