The Legislative Council in Hong Kong has approved a new amendment to the anti-money laundering (AML) and terrorist financing system to include virtual asset service providers.
According to report, the legislation will create a new licensing regime for virtual asset service providers, effective as from June 1, 2023. Thus, the new amendment will subject crypto exchange service providers to the same legislation as traditional financial institutions.
Essentially, this means that crypto exchanges looking to establish a business in Hong Kong must abide by AML guidelines and investor protection laws before obtaining a license to operate. Understandably, regulators in the region are capitalising on the recent FTX collapse to monitor the activities of crypto exchanges.
The widely reported implosion also inspired a growing demand to bring crypto exchanges and service providers under the supervision of law, subjecting them to stringent AML and investor protection conditions.
SBF and his cohorts reportedly mismanaged $10 billion of investors’ and users’ funds. Therefore, crypto exchanges have renewed efforts to restore trust, while regulators have been under fire for failing to protect retail investors.
Meanwhile, in a recent conference, Hong Kong Monetary Authority chief executive Eddie Yue suggested that the nation had considered moving on investor protection regulations. However, the latest development makes Hong Kong the first mover on such a matter
Hong Kong has been actively working towards establishing a well-thought regulatory groundwork for the growing crypto market. In October, a policy proposing a regulatory framework and risk-based regulatory direction was published by the Hong Kong government under the title ‘Policy Declaration on the Development of Virtual Assets”. In addition, the government has suggested some pilot projects to evaluate and improve the technologies underlying virtual assets.
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