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Hong Kong’s legislative council has amended its Anti Money Laundering and Countering Terrorist Financing (AML/CTF) regulations in order to bring a licensing regime for crypto exchanges.
The proposed law will introduce a licensing system for virtual asset services providers, requiring them to adhere to stringent AML/CTF standards.
The revised legislation is scheduled to come into effect from June 1, 2023. The proposed amendment will hold cryptocurrency exchange service providers accountable to the same laws that conventional financial institutions do.
#cryptonews: Hong Kong 🇭🇰 is to subject #crypto providers to the same anti-money laundering and counter-terrorist financing laws that it does traditional finance firms.
— CoinMarketCap (@CoinMarketCap) December 9, 2022
This implies that before being granted a licence to operate, virtual exchanges seeking to launch a business in Hong Kong would be subject to stringent AML criteria and investor protection legislation before being granted a licence to operate. Hong Kong’s regulators, in contrast to others around the world, have used the FTX collapse to reduce the regulatory risks linked with centralised exchanges.
Following the collapse of the FTX cryptocurrency exchange, regulators have come under fire for failing to safeguard retail investors. The demand to regulate cryptocurrency exchanges and service providers, subject them to stringent AML standards, and ensure investor safety has increased.
Eddie Yue, the Chief Executive of the Hong Kong Monetary Authority, made a suggestion during a recent conference that the country may soon adopt investor protection measures. The nation has taken the lead in addressing the urgent problem of investor protection due to the most recent legislative revision.
Hong Kong has been vigorously attempting to create a sound regulatory foundation for the emerging cryptocurrency business. The Hong Kong government released a “Policy Declaration on the Development of Virtual Assets” that proposed a regulatory system and risk-based approach. A variety of pilot projects have been proposed by the government as a way to assess and enhance the technologies supporting virtual assets.
Suggested Read: Hong Kong Looking to Legitimize Crypto Trading for Retail Investors