• Hong Kong has launched strict regulatory requirements limiting over-the-counter (OTC) suppliers.
• Though OTC platforms play an essential function in cryptocurrency buying and selling, they’re suspected of facilitating unlawful cryptocurrency exercise.
• The brand new guidelines are anticipated to result in consolidation and discount of using OTC platforms in unlawful crypto buying and selling.

Hong Kong has reportedly begun implementing strict regulatory requirements limiting over-the-counter (OTC) suppliers in a bid to scale back unlawful cryptocurrency buying and selling exercise. Chen-Yi Ong, Head of Asia-Pacific Coverage at Chainalysis, commented that this regulatory framework will result in “consolidation and discount” of using OTC platforms by malicious actors.

Roughly 450 shops, ATMs and different on-line platforms throughout Hong Kong facilitate OTC crypto buying and selling, based on Chainalysis information. These platforms play a key function in digital transactions throughout town, however are additionally suspected of facilitating prohibited cryptocurrency actions. Carlton Lai, Head of Blockchain Analysis at Daiwa Capital Markets, commented:

The decentralized nature of cryptocurrencies makes regulating the trade extraordinarily tough. There are lots of offshore-based cryptocurrency exchanges and apps that customers can simply entry with out authorities oversight.

In furtherance of Hong Kong's imaginative and prescient of creating a crypto hub, the Monetary Providers Authority and the Treasury Division have begun scrutinizing over-the-counter crypto transactions. The regulator's efforts targeted on stopping cash laundering, terrorist financing, and fraud. In accordance with Ong, his new OTC framework will assist “higher handle crime, cybersecurity and different operational dangers.”

The Monetary Providers and Treasury Division develops the regulatory framework underneath the Customs Division. A spokesperson commented that Customs is essentially the most acceptable authority to scrutinize OTC service suppliers. The rule would require these suppliers to keep up buyer data and strengthen their workforce.

Cryptocurrency advisor Vince Turcotte argued that OTC buying and selling rules are a “pure extension” of the present regulatory framework. Turcotte added: “The principle impression might be additional legitimization of the Hong Kong market.”