May 18, 2024

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Hong Kong’s virtual asset licensing regime to take effect next June

Hong Kong’s Legislative Council passed the amendment to the bill that includes a licensing regime for virtual asset service providers (VASP) on Wednesday, which will come into effect on June 1, 2023, three months later than initially planned.  

See related article: Hong Kong crypto exchange AAX has lost most staff, unlikely to reopen, says former executive 

Fast facts

  • The transition period is intended to give sufficient time for businesses to apply for the license or pursue registrations, according to a government press release.
  • The amended Anti-Money Laundering and Counter-Terrorist Financing Bill requires VASPs to obtain a license from the Securities and Futures Commission. 
  • Applicants must also pass local anti-money laundering and counter-terrorist financing scans while complying with regulatory requirements on investor protection, which includes “safe custody of client assets.” 
  • “According to the number of previously issued licenses and the transition period of the new draft, applicants have to be prepared for a protracted battle, which may take more than a year to gain a license,” Wing Tan, chief finance officer at Hong Kong-based Fore Elite Capital Management told Forkast.
  • Hong Kong recently rolled out the welcome mat for the cryptocurrency industry and doubled down on its position despite the implosion of FTX.com, a now-bankrupt cryptocurrency exchange formerly based in Hong Kong that has been accused of trading with customer funds.
  • This week, three asset managers applied for exchange-traded funds (ETF) that track cryptocurrencies in Hong Kong, according to Nikkei Asia.
  • Meanwhile, Hong Kong-based asset management company Pando Finance launched two virtual assets ETFs on Thursday, South China Morning Post reported

See related article: Unfazed by FTX fiasco, Goldman Sachs eyes investments in crypto market