Home
News
- The legislative council of Hong Kong issued new reforms in AML and CFT.
- A digital exchange has to go through harsh AML guidelines and investor protection requirements.
- Licensed entities shall work as a traditional financial institutions.
The main plus point of cryptocurrency is its anonymity, but as each coin has two sides, this feature has proved to be a boon for illegal activities and terror funding. Every country is doing something or the other to control this. The legislative council of Hong Kong has passed a new reform to its AML (Anti-Money Laundering) and CFT (Combating the Finance of Terrorism), which will include a virtual asset service provider.
The legislation will establish new licensing establishment for digital asset service providers, which will come into effect from June 1, 2023. The licensed providers will follow the same legislation as any traditional financial institution.
Suppose a digital exchange wishes to operate in Hong Kong. In that case, it must go through rigorous AML guidelines and follow investor protection laws if it wants a license of operation. Unlike any other country, Hong Kong has used the FTX collapse as an example to soften the risks associated with centralized exchanges.
Regulators worldwide are facing angry eyes from investors, as they failed to protect retail investors during the FTX collapse. Even before its collapse, there has been a demand to bring crypto service providers and crypto exchanges under the insight of law. They shall also abide by the strict AML and CFT laws and follow investor protection requirements.
In a conference, Eddie Yue, Hong Kong Monetary Authority chief executive, hinted that possible investor protection regulations are on the horizon. The recent amendment has propelled the nation to secure the first spot in the pressing issue of investor protection.
In October, a policy that proposed a risk-based regulatory direction and a regulatory framework was published by the Hong Kong government titled “Policy Declaration on Development of Virtual Assets.” The government has also hinted at many such projects in the pipeline, which will evaluate and improve the technologies underlying the virtual assets.
Conclusion:
Ever since the domino effect of the FTX collapse hit the market, every exchange and service provider has been facing one or another problem. The whole incident has deviated from the interest of retail investors. And almost all of them are demanding regulations that keep them safe.
Hong Kong became the first nation to work and apply these rules from June 1, 2023. And many more countries are supposed to follow suit. The FTX hearings are about to start on October 13, and this will give insights into the deceit. And will provide lawmakers with new points to work on. However, a fool-proof system without any loophole is like a perpetual motion machine and doesn’t exist. But at least we can try.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
