New legislation in Hong Kong needs virtual asset service providers to pass AML rules
New legislation in Hong Kong need virtual asset service providers to pass AML and investor protection guidelines.
The legislative council of Hong Kong has approved an update to its anti-money laundering (AML) and terrorist financing system to cover virtual asset service providers. Before receiving a license to operate, virtual exchanges seeking to establish a business in Hong Kong will be required to pass strict anti-money laundering (AML) regulations and investor protection guidelines.
This recent law will create a new licensing system for service providers of virtual assets, which is scheduled to take effect on June 1, 2023.
With the new amendment, crypto exchange service providers will be governed by the laws that governs conventional financial institutions. Hong Kong's regulators have exploited the FTX collapse to reduce the regulatory risks connected with centralized exchanges.
Hong Kong has been seeking to create a strong regulatory foundation for the emerging crypto business. In October under the heading "Policy Declaration on the Development of Virtual Assets," the Hong Kong government released A policy highlighting a regulatory framework and risk-based regulatory direction. For the purpose of evaluating and enhancing the technology supporting virtual assets, the government has initiated different variety of pilot projects.
During a recent conference Eddie Yue, the chief executive of the Hong Kong Monetary Authority, made a suggestion that the country may soon adopt investor protection measures. The most recent legislative revision led the nation to address the urgent problem of investor protection. In month of November, the deputy CEO of the Securities and Futures Commission, demanded the implementation of strict regulations on cryptocurrency firms claiming that recent events had highlighted the industry's volatility and the dangers posed by its connections to conventional financial services.
CBW - External Analyst