Hong Kong crypto laws will fall into line with the recommendations of the FATF international watchdog in 2020. This will mean a tougher stance on their anti-money laundering and counter-terrorist financing controls.
The Latest Developments
Hong Kong Financial Secretary Paul Chan mentioned the need for more crypto controls. He made his comments in the annual budget speech that he delivered earlier this week.
He said that there will be “detailed proposals” issued later on in the year. The new Hong Kong crypto regulations are expected to focus on virtual asset service providers, known as VASPs. This is the group covered by the Financial Action Task Force (FATF) recently.
It seems that the authorities are keen to comply with the watchdog’s suggestions. Their so-called travel rule has caused controversy in the industry. Under this rule, they want to ensure that identities are provided for all cryptocurrency transactions over a set limit.
What Does This Mean for Crypto in Hong Kong?
These new moves could transform the Hong Kong crypto industry. It would affect cryptocurrencies and brokers in the region. This city is a global hub for cryptocurrencies and large numbers of transactions go through here. Precious metal dealers are also to be affected by it.
The Hong Kong Monetary Authority (HKMA) controls the industry here currently. They stated at the end of 2019 that VASPs should self-regulate by being vigilant regards their clients.
Carmen Chu is the KMA’s AML enforcer. She said last December that authorised companies should stay up to date with both local and international developments.
They can “apply a risk-based approach” in this way. Chu says this is based on responsible financial innovation and also good ML/TF risk management.
The FATF watchdog rated the Hong Kong crypto industry as “largely compliant” a few months ago. Yet, this latest budget speech shows that authorities there want to go a step further.
What Other Countries Are Doing Something Similar?
A number of countries around the world are working hard to comply with the FATF guidelines. Paraguay is a newcomer doing this. South Korea is another big player that is looking at its controls. Singapore is also making changes, with new licenses being issued.
The Financial Services Regulatory Authority in Abu Dhabi has announced some changes to its crypto legislation. Their moves include matching the FATF’s term for phrases such as “virtual asset”. They have previously known this as a “crypto asset”.
The Hong Kong crypto industry is in time a change. The same applies elsewhere too. Cryptocurrency exchanges, investors and other interested parties could be affected. They will all be keeping a close eye on how these regulatory matters are resolved.