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Hong Kong has proposed to expedite the licensing course of for digital asset (VA) buying and selling platforms, pushing to turn into a number one cryptocurrency hub.
In a press release dated 11 December 2024, the Authorities of the Hong Kong Particular Administrative Area detailed a collection of initiatives geared toward fostering innovation whereas guaranteeing monetary stability and investor safety.
Hong Kong to hurry up crypto licensing as competitors intensifies https://t.co/GQBdujRDBw
— The Block (@TheBlock__) December 11, 2024
Performing Secretary for Monetary Providers and the Treasury, Joseph Chan, addressed the Legislative Council. Chan mentioned {that a} “swift licensing course of” shall be prioritised because the area competes with different international monetary centres.
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Strengthening Licensing Framework For Crypto Buying and selling
Chan introduced that the Securities and Futures Fee (SFC) would revise its licensing system for business buying and selling in cryptocurrency platforms.
The SFC is planning to arrange a “consultative panel” in early 2025 to information licensed buying and selling platform operators. In June 2023, Hong Kong implemented a crypto licensing framework, permitting licensed exchanges equivalent to OSL Change, HashKey Change, and HKVAX to supply retail buying and selling providers.
Furthermore, Chan highlighted {that a} draft legislative invoice is deliberate for the regulation of issuers of fiat-linked stablecoins. The invoice, anticipated to be offered to the Legislative Council inside the month, would require issuers to acquire licenses from the Hong Kong Financial Authority (HKMA).
The report additionally acknowledged that the authorities are proposing a framework that can allow the licensing of crypto custodians by the tip of subsequent 12 months.
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Hong Kong To Adhere To International Crypto Norms
Hong Kong’s up to date regulatory framework, centered on the Anti-Cash Laundering and Counter-Terrorist Financing Ordinance (AMLO), units a strong basis for Digital Asset Service Suppliers (VASPs) to function inside the area.
This legislative framework requires crypto corporations to adjust to worldwide requirements, together with Anti-Cash Laundering (AML) and Counter-Terrorism Financing (CTF) protocols, whereas acquiring a license from the SFC.
Along with adhering to international norms such because the Financial Action Task Force’s (FATF) Recommendation 16, which mandates enhanced person and fund data sharing throughout asset transfers, VASPs are required to implement Buyer Due Diligence (CDD) and monitoring protocols.
Complementing that is the HKMA’s 2024 guidance for digital asset custodians, which incorporates sturdy governance, asset segregation, and clear disclosures, to make sure shopper funds stay protected.
In March 2024, the HKMA launched a regulatory sandbox to advertise the secure improvement of stablecoins. This initiative, stemming from discussions since 2022, was deliberate to supply a managed setting for stablecoins to evolve underneath regulatory oversight.
ZA Financial institution, a number one on-line banking agency, has reportedly adopted this initiative with a financial institution’s chief government informing that they had been desperate to discover sensible use instances with potential issuers for the various software of stablecoins.
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Exploring Alternatives, Managing Threat
In its policy statement from October 2022, the federal government advocated an initiative for “similar actions, similar dangers, similar laws” aligning with its VA regulation.
Chan emphasised that the VA sector is remodeling quick. Based on him there are alternatives but additionally hazards, equivalent to dangers to monetary stability, cash laundering, and dangers to the investor.
Hong Kong is reportedly in search of to stick to international requirements, together with these outlined by the Financial Stability Board in July 2023
The Monetary Providers and the Treasury Bureau (FSTB) will proceed adjusting its strategy to over-the-counter VA buying and selling providers, incorporating suggestions from public consultations.
A second session is slated for subsequent 12 months in order to boost the stakeholder engagement of the town.
Disclaimer: Crypto is a high-risk asset class. This text is offered for informational functions and doesn’t represent funding recommendation. You might lose your whole capital.
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