• Hong Kong has set a 12-month transition interval for the brand new VATP licensing regime.
• VATP should show a big native presence below the brand new rules.
• Violation of the brand new rules may end in legal prosecution.

Hong Kong is tightening controls over its digital asset buying and selling platform (VATP) because it prepares for a 12-month transition part beginning June 1, 2023. The brand new regulatory regime will give attention to combating cash laundering and the financing of terrorism, in keeping with the round launched. By the Securities and Futures Fee of Hong Kong (SFC).

Current VATPs should adapt to the brand new guidelines by Could 31, 2024, topic to sure standards resembling bodily places of work, native directors and key personnel stationed in Hong Kong. should present a robust presence. Nonetheless, the SFC clarified {that a} mere firm registration or fictitious enterprise won’t move the eligibility take a look at.

Platforms engaged in safety token buying and selling providers face varied rules below the Securities and Futures Act. Such VATPs should acquire the related licenses earlier than they’ll begin working. Nonetheless, the SFC Round solely applies to platforms that present token buying and selling providers aside from safety.

The round will give VATP already energetic in Hong Kong a grace interval earlier than the June 2023 deadline. These platforms can proceed to function throughout the transition interval with out violating licensing rules, so long as they work in the direction of acquiring the mandatory licenses.

The brand new VATP, meant to start out operations in city-states, isn’t afforded the identical luxurious. They need to first safe a license or face legal prosecution for unauthorized exercise. This rule additionally applies to people performing regulated roles on such platforms.

As a closing lifeline, the SFC has set a “definitive settlement” to proceed operations from 1 June 2024 whereas VATP and certified managers or consultant candidates are nonetheless below overview of their license purposes. made it doable.

Over the previous few months, Hong Kong has witnessed important developments within the cryptocurrency house, demonstrating rising curiosity and adoption of digital property. Finance Minister Chen Maobo’s announcement final week mirrored the federal government’s recognition of the potential of Web3 and digital property and its dedication to selling accountable development within the sector.