Hong Kong Solicits Feedback On Proposed Regulations For Over-the-Counter Crypto Trading – CryptoInfoNet

Last updated:
February 8, 2024 06:12 EST
| 1 min read

Hong Kong revealed on Thursday an initiative to discuss the regulation of over-the-counter (OTC) cryptocurrency trading platforms.

The Financial Services and the Treasury Bureau is opening up a conversation on creating a licensing structure for virtual asset OTC service providers. A part of this new framework would require these operators to secure licenses and comply with measures to prevent money laundering and terrorism financing.

This proposal suggests that entities trading virtual assets in Hong Kong would need to be licensed by the Commissioner of Customs and Excise (CCE). Virtual Asset Trading Platforms (VATPs), however, would not be affected by this as they already fall under the regulatory scope of the Securities and Futures Commission (SFC).

Those with authorized exchange or stablecoin issuer licenses won’t be subject to these regulations.

— Wu Blockchain (@WuBlockchain) February 8, 2024

FSTB Invites Written Responses to the Disclosure until April 12

The CCE will gain the authority to enforce this regulatory framework and manage any licensed virtual asset OTC service firms, in line with legislated directives.

“These legislative measures are key to the government’s plan in building a solid and transparent regulatory atmosphere. They will aid in the continuous growth of virtual assets and the Web3 sector,” remarked a representative from the government.

Entities with a license recognized for exchanges or issuers of stablecoins will be spared from the new licensing requirement.

Recently, the FSTB’s Christopher Hui underscored the potential dangers associated with OTC platforms, noting their direct accessibility and previous involvement in fraudulent activities.

The Financial Services and the Treasury Bureau (FSTB) has declared its openness to receive written feedback on the consultation until April 12th.

Impending Deadline for Crypto Exchanges in Hong Kong

Hong Kong aims to enhance its reputation as a friendly environment for cryptocurrencies, seeking to draw capital and talent. It looks to recover its status as a leading global financial center by capitalizing on the burgeoning crypto market and investor interest.

The administration demonstrates its readiness to integrate with the cryptocurrency realm through the introduction of novel regulations. These regulations supervise crypto exchanges and unlock trading for a wider range of investors, including the retail sector.

This week also saw the SFC of Hong Kong issuing an advisory to cryptocurrency investors to only engage with licensed trading platforms and to confirm the legitimacy of such exchanges they use.

The update aligns with the upcoming requirement for Hong Kong–based virtual asset trading platforms to apply for their licenses by February 29 or shut down by the end of May.

In addition, Hong Kong is expected to follow in the footsteps of the US by sanctioning spot Bitcoin ETFs. Back in December, both the SFC and the Hong Kong Monetary Authority disclosed their readiness to consider applications for virtual asset spot ETFs and also laid out best practice guidelines for intermediaries that intend to sell these funds.