Hong Kong’s Securities and Futures Commission (SFC) released a circular on May 31 announcing the transitional arrangements for a new licensing system for centralized crypto trading platforms. As per the report, the novel licensing regime under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap 615) (AMLO), is in force from today.
The SFC has declared that under the new rule, the virtual assets trading platforms (VATPs) providing services in Hong Kong would be required to be licensed by the commission. It added that the circular would apply only to the platforms that provide services with non-security tokens.
The circular highlighted that the VATPs that have been functioning in the city before June 1, 2023, are eligible for the transitional arrangements and are required to apply for a license before 29 February 2024, via SFC’s application forum WINGS. In contrast, the VATPs which were not in existence before June 1 are not eligible for the transitional arrangements.
As asserted by the commission, the platforms that do not intend to apply for the license would be forced to shut down their services, ceasing their marketing activities in Hong Kong. It was also proclaimed that the already existing VATPs could “continue to provide the VA service in Hong Kong from 1 June 2023 to 31 May 2024 without being in breach of the licensing requirements under the AMLO by virtue of the non-contravention arrangement.”
The commission also posited that there is “no transitional arrangement for compliance with the Securities and Futures Ordinance (SFO),” adding:
VATPs which intend to provide trading services in security tokens will be subject to the securities laws of Hong Kong and should commence their businesses in providing trading in security tokens only upon obtaining the relevant license under the SFO.
Though the circular intends to provide adequate time for the platforms to get licensed and continue their services in Hong Kong, SFC strongly objects to any delay in the submission of the application after February 2024. The commission stressed that any application submitted after the due date would be rejected.
SFC has been promoting regulations on virtual asset trading in an attempt to establish the industry in compliance with the authority. The commission’s proposal for the licensing system has been put forward earlier and was supported by many, though some asked for further clarifications.
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