Hong Kong’s new legislation includes a licencing system for cryptocurrency exchanges

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The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 has been updated by Hong Kong’s legislative council to take cryptocurrency into account.

In essence, the legislation will establish a licencing system for companies that provide virtual asset services (VASPs).

Hong Kong’s VASP Licensing
By virtue of the new additions, VASPs wishing to launch operations in the area will be required to go through a licencing process in accordance with AML guidelines and investor protection laws. Colin Wu’s report states that failing to do so could result in a $5 million fine and 7 years in prison.

Another feature of the new legislation is a crackdown on deceptive cryptocurrency advertisements. Meanwhile, fraudulent and dishonest cryptocurrency transactions could result in fines of $10,000,000 and ten years in prison. Beginning in June of the following year, a new licencing system will be in place.

Despite the industry-wide shockwaves caused by the FTX collapse, Hong Kong has been relatively bullish on the area.

Making Retail Crypto Trading Legal

The Hong Kong government made hints earlier this year about implementing a mandatory licencing scheme for cryptocurrency platforms that will allow for retail crypto trading. The former global hub of cryptocurrency businesses like Binance, Amber Group, Q9 Capital, and FTX intends to reinvent itself as a hub for all things cryptocurrency.

Three asset management firms recently submitted their ETF applications to the Securities and Futures Commission (SFC) in Hong Kong: CSOP Asset Management, Samsung Asset Management, and Mirae Asset Global Investments. The application was made in response to SFC’s declaration that retail investors might be able to trade in ETFs linked to digital assets.

The co-founder of Web 3 giant Animoca Brands, Yat Siu, claimed that Hong Kong might soon overtake Singapore as Asia’s leading crypto hub:

“Singapore withdrew following the Terra Luna and Three Arrows incident. The competition now comes from Hong Kong. Hong Kong recently made its policy public. Given that Hong Kong is entering at a time when the market is struggling and slowing down, I find the timing to be interesting. This is a good entry point for them.

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