The Hong Kong Legislative Council has approved a cryptocurrency law that will soon open virtual assets to retail investors. As Kriptokoin.com, we have compiled the content of the law for you in this article.
Cryptocurrency law approved
Financial service providers in Hong Kong are taking their first steps to serve retail investors. It has been reported that brokers and fund managers in the region sought advice on licensing requirements prior to new legislation. In December 2022, a change was made to the Anti-Money Laundering (AML) and terrorist financing system. Also, this is in line with the region’s recent stance on expanding the possibility of crypto trading. The change introduces a new licensing scheme for virtual asset service providers that will allow retail investors to trade in virtual assets. Currently, virtual asset trading is limited to professional investors or investors with proof of at least $1 million in bankable assets.
Victory Securities and Interactive Brokers became the first two brokers in Hong Kong to trade virtual assets for their professional clients with SFC. According to Deloitte Hong Kong’s digital asset leader Robert Lui, retail investors will likely be able to trade virtual assets with a great market cap and liquidity. Currently, Hong Kong-based brokers do not need a special license to serve clients who trade fund futures traded on the Hong Kong exchange based on Bitcoin and Ether. However, those who will provide virtual asset trading will need additional SFC approval. The new licensing was originally scheduled for March 1 of this year. However, the date was later postponed to June 1 to give virtual asset service providers time to prepare.
Postponement decision
Adopted new change to AML and terrorist financing system to include virtual asset service providers. The latest legislation will take effect from 1 June 2023 for virtual asset service providers. The new amendment will subject crypto exchange service providers to the same legislation followed by traditional financial institutions.
This is for virtual exchanges looking to open a business in Hong Kong. However, exchanges will need to pass AML guidelines and investor protection laws before an operating license is issued. Hong Kong used the collapse of FTX as a way to mitigate the regulatory risks associated with centralized exchanges. After the collapse of the FTX crypto exchange, regulators from around the world faced public outrage. There is a demand for crypto exchanges and service providers to be covered by the law.
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