Hong Kong’s Financial Services Development Council — a cross-sector advisory body established by the government to engage the city’s financial services industry — is putting together industry feedback on the government’s legislative proposals related to virtual assets and virtual asset service providers.
Fast facts
- In May, Hong Kong’s Financial Services and the Treasury Bureau released a report on the conclusions of a three-month public consultation that outlined various proposals to enhance anti-money laundering and counter-terrorist financing regulations in line with the Financial Action Task Force’s recommendations for countries to regulate VASPs. Hong Kong intends to introduce an amendment bill based on the consultation results in its Legislative Council’s 2021-22 session.
- The proposals include allowing foreign-incorporated companies to apply for VASP licenses and limiting cryptocurrency exchanges to serving professional investors, a restriction that prompted concerns crypto exchanges operating in Hong Kong would close or move elsewhere. Under Hong Kong law, investors must hold portfolios worth HK$8 million (US$1.03 million) to qualify for professional investor status.
See related article: What will happen if Hong Kong bans retail investors from trading crypto?
- Although many in the crypto industry were disappointed by the proposal to limit crypto trading to professionals, some told Forkast.News that regulation was inevitable as the crypto industry matured, and expressed hope that the government would revisit its stance in time.
- The FSDC’s online survey invites VASPs to comment on whether the proposed regulations will affect their operations in Hong Kong, and whether they have plans to restructure their business as a result of the proposals. Other questions relate to issues faced by VASPs operating in the city, and the strengths and weaknesses of Hong Kong as a blockchain technology and digital asset hub.
- The deadline for responses to the FSDC via an online survey is today.