Hong Kong is one of the most prominent financial hubs in the world and has led the cryptocurrency industry for years. To regulate the industry and protect investors, the Hong Kong Securities and Futures Commission (SFC) introduced new guidelines for cryptocurrency licensing in 2019.
The Guidelines for Service Providers of Virtual Assets:
In November of 2019, the SFC issued the Guidelines for Virtual Asset Service Providers (VASP). The guidelines stipulate that all Hong Kong-based trading platforms for virtual assets must be licensed by the SFC or receive an exemption.
The SFC defined virtual assets as digital representations of value that can be electronically traded or transmitted and function as a medium of exchange, unit of account, or store of value.
According to reports, the Hong Kong Securities Futures Commission (SFC) will issue cryptocurrency exchange license rules in MAY.
Bloomberg first reported the intentions on April 27, citing statements made by SFC CEO Julia Leung on Thursday.
The new rules will help crypto trading platforms that will be permitted to provide trading services to regular clients from June 1, 2023.
According to Bloomberg, Leung said that the licensing regime consultation process garnered over 150 replies from interested parties.
Some of the important concerns made in the Feb. 20 report that Leung was apparently referring to were anti-money laundering (AML) and Know Your Client (KYC) regulatory requirements.
While most prospective Virtual Asset Service Provider (VASP) licensees await affirmation, some trading platforms have already begun offering crypto-related services to SFC-regulated investors.
Conclusion, The Hong Kong guidelines for crypto licensing are an important step toward regulating the virtual asset industry and safeguarding investors. While the guidelines have created challenges for smaller trading platforms for virtual assets, they have also increased industry transparency and stability. As the industry continues to mature, it is probable that additional nations will adopt similar regulations to regulate the virtual asset market and safeguard investors.