The government administration that oversees the Chinese territory of Hong Kong has updated its regulations to subject cryptocurrency firms to the same anti-money laundering and counter-terrorist financing laws that apply to traditional banks and other financial entities.
Hong Kong’s Legislative Council voted in favour of adding virtual asset service providers (VASPs) to its “Anti-Money Laundering and Counter Terrorist Financing Ordinance” starting on June 1, 2023.
The fallout from the collapse of cryptocurrency exchange FTX, which was based in Hong Kong before relocating to the Bahamas in September 2021, has cast a big shadow over the city’s cryptocurrency industry.
Hong Kong has traditionally been a hot spot for the global cryptocurrency sector, with numerous lenders and exchanges setting up shop in the city.
Hong Kong’s openness to crypto has stood in stark contrast to the situation in mainland China where all crypto activity has been banned by the central government in Beijing.
Before FTX filed for bankruptcy this past November, Hong Kong had been relaxing its regulations in an effort to become more crypto-friendly and attract a greater number of digital firms to the city.
The Financial Services and Treasury Bureau said at the end of October this year that it was open to allowing retail customers to trade cryptocurrency, and open to approving crypto-based exchange traded funds (ETFs).
That approach changed in late November when Hong Kong’s Securities and Futures Commission called for tough rules to be implemented on crypto firms, saying that the FTX collapse, and other recent events, highlighted the potential danger posed to investors.
