The Hong Kong Government wants to ban cryptocurrency trading on unregulated exchanges. Exchanges in Hong Kong must be licensed in order to continue. The government plans to release a document on the new rules on Tuesday afternoon, says Christopher Hui Ching-yu in an interview with Yahoo Finance. Hui is Hong Kong’s Secretary for Financial Services.
All cryptocurrency exchanges from Hong Kong
The new rules cover all types of cryptocurrency trading platforms operating in Hong Kong. This also applies to foreign exchanges targeting Hong Kong.
Hui: „Simply put, we will require that all digital currency trading platforms, Bitcoin Cycle operate transparently. Under the proposed new regulatory regime, they must fit within the authorisation requirements of the SFC and must follow all consumer protection and anti-money laundering regulations‘.
The new authorisation rule would meet the requirements of the Financial Action Task Force (FATF), of which Hong Kong is one of over 200 member jurisdictions. Since last year, the International Anti-Money Laundering Organisation has required all its members to introduce compulsory licensing or registration for virtual trading platforms.
Standstill in innovation
Hugh Madden is a board member of BC Technology Group, a platform for digital assets in Hong Kong. He does not like the regulatory environment: „The new regulation is likely to lead to a standstill in the industry, as not all trading platforms operating in Hong Kong today will be able to meet some of the licensing requirements and associated compliance costs. He expects some of the exchanges to leave Hong Kong.
In this sense, the situation in Hong Kong is also similar to that in the Netherlands. In April 2020, the Senate voted in favour of a new law to ensure that Dutch crypto companies are subject to the supervision of the Dutch Central Bank. Not all parties were able to comply with these new rules, and some smaller parties were forced to quit.