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30/05/24
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Hong Kong Regulator to Inspect Virtual Asset Trading Platforms’ Offices
On May 28, Hong Kong’s Securities and Futures Commission (SFC) reminded virtual asset trading platforms (VATPs) about applications to operate under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).
That is, VATPs are required to either obtain a license from the SFC or be “deemed-to-be-licensed” VATP applicants. Operating a VATP without meeting the AMLO stipulations is a crime which will lead to prosecution.
The deemed-to-be-licensed VATP applicants are those who started operating in the region prior to the SFC introducing the new VATP licensing regime. Hence, they have not received a formal license from the SFC, but have worked on their controls, systems, policies and procedures towards complying with regulatory requirements.
“The SFC also reminds all VATPs and their ultimate owners to comply with all applicable laws and regulations, including but without limitation, preventing Mainland Chinese residents from accessing any of their virtual asset-related services, and to take all necessary measures to procure the VATPs’ controlling entities and related parties to do the same,” said SFC.
However, the regulator requires deemed-to-be-licensed VATP applicants to show that they have implemented expected measures satisfactorily. SFC intends to carry out on-site inspections towards ascertaining that they are complying, especially regarding the safeguarding of client assets and know-your-client processes.
The essence of the inspection is to improve the process of licensing while safeguarding the interests of investors. Those who fail to comply with regulatory stipulations as observed during inspection will not be granted a license and will face necessary regulatory action.
There has been a steady decline in the number of cryptocurrency exchanges in Hong Kong over the past few weeks due to the introduction of the new licensing regime. Eleven cryptocurrency firms and exchanges, including Huobi and OKX withdrew their applications before the deadline. Seven days ago, Gate.HK stopped marketing and onboarding of new users, started delisting tokens and disabled deposits.
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