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Policy

Hong Kong Government Proposal on Licensing Crypto Firms Ends Consultation Period

The government plans to introduce licensing for virtual asset service providers.

By Jamie Crawley
AccessTimeIconMay 21, 2021 at 11:13 a.m. UTC
Updated Sep 14, 2021 at 12:59 p.m. UTC
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As part of a move to tighten anti-money laundering regulations, the Hong Kong government is moving to license virtual asset service providers (VASP) via a legislative proposal that has now moved past its consultation period.

  • The Securities and Futures Commission (SFC) would be provided with "necessary intervention powers" to impose restrictions or even prohibitions on companies providing crypto services, according to an announcement Friday.
  • The proposal would bring the SFC more powers to protect clients against potential misconduct from VASPs.
  • It would also restrict VASPs to serving only professional investors, according to CoinDesk's earlier reporting.
  • Such firms would be regulated under the measure regardless of whether they offer access to tokens considered to be securities or solely cryptocurrencies like bitcoin.
  • The announcement today forms the conclusion of a consultation process that ran from November 2020 to the end of January 2021.
  • Hong Kong is aiming to align with anti-money-laundering guidance from the Financial Action Task Force (FATF) with the legislation.
  • This news comes soon after self-regulatory organizations in China reiterated their stance on banning crypto services on May 18.
  • The National Internet Finance Association, the China Banking Association and the Payment and Clearing Association of China published a note confirming bans originally implemented in 2013 and 2017 that bar any services related to cryptocurrency transactions.

Update (12:00 UTC, May 21, 2021): Adds details of government announcement and context.

See also: OSL, Hong Kong’s First Regulated Crypto Exchange, Commences Live Trading

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