Aiying learned that the Hong Kong government announced the launch of a public consultation on the legislative proposal to establish a licensing system for virtual asset over-the-counter service providers. The key points include: anyone who provides any virtual asset and cash spot trading services in the form of business in Hong Kong must apply for a license from the Commissioner of Customs; empower the Commissioner of Customs to supervise the compliance of licensees in combating money laundering and terrorist financing; and provide transitional arrangements to enable the effective implementation of the regulatory system.
The virtual asset over-the-counter trading business will be defined as: providing spot trading services for any virtual asset in the form of a business; whether the services are provided through physical stores (i.e. including ATMs) or other platforms (such as digital platforms); and explicitly excluding the operation of virtual asset trading platforms that are already covered by the virtual asset trading platform licensing system. The draft also proposes to consider granting similar exemptions to licensed stablecoin issuers after the implementation of the stablecoin issuer licensing system.
Anyone who engages in regulated virtual asset OTC trading services without a licence is liable to a fine of $100 million and two years' imprisonment upon conviction upon indictment. Anyone who knowingly issues an advertisement about a non-licensed person providing virtual asset OTC trading services is guilty of an offence and liable to a fine at level 5 (currently $5) and six months' imprisonment. If a licensee violates statutory anti-money laundering and terrorist financing provisions, he or she is liable to a fine of $100 million and two years' imprisonment upon conviction upon indictment.