The Hong Kong Securities and Futures Commission (SFC) recently issued a statement reminding the public that the non-violation period for virtual asset trading platforms will end on June 1, 2024. This means that all virtual asset trading platforms operating in Hong Kong must comply with the requirements of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
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ToggleCompliance period is coming to an end
The Hong Kong Securities and Futures Commission reminds the public that the non-violation period of virtual asset trading platforms under the Anti-Money Laundering Ordinance will end on June 1, 2024. All virtual asset trading platforms operating in Hong Kong must be licensed by the Securities and Futures Commission under the Ordinance, or be "deemed to be licensed" applicants. Operating a virtual asset trading platform without a license will constitute a criminal offense and the Securities and Futures Commission will take all appropriate actions.
OKX and other companies have voluntarily withdrawn their applications, and the blockchain carnival has officially come to an end.
Although during this year’s Hong Kong Blockchain Carnival, various industries sang loudly about Hong Kong’s opening up and declared that they would actively apply for Hong Kong licenses, in the end, most companies withdrew their applications on their own initiative , and one company was rejected. For example, the well-known exchange OKX announced on May 24 that it had withdrawn its Hong Kong application due to "business considerations", which is equivalent to announcing its withdrawal from the Hong Kong market. The exchange Binance has never filed a compliance application in Hong Kong, nor has it participated in the Hong Kong Blockchain Carnival.
Looking back, one of the major highlights of the Hong Kong Blockchain Carnival is the diversified development under open licenses. However, in the end, only OSL and Hashkey actually held licenses.
China Securities Regulatory Commission warns investors: Choose exchanges carefully
The Securities and Futures Commission urges investors to only trade on virtual asset trading platforms licensed by the Securities and Futures Commission. Investors should check the "List of Licensed Virtual Asset Trading Platforms" on the SFC website to ensure that the platform they are using has been officially licensed.
Investors should note that applicants for virtual asset trading platforms that are deemed to be licensed have not obtained formal licenses. These platforms were already operating in Hong Kong before the implementation of the new regulations. Although they have promised to improve policies, procedures and monitoring measures, they still need to prove the actual implementation and effectiveness of these measures to obtain the approval of the Securities and Futures Commission.
The China Securities Regulatory Commission emphasizes that it does not guarantee the performance or credit of any virtual asset trading platform licensed by the China Securities Regulatory Commission.
Businesses deemed to be licensed must still operate in a low profile
Applicants for a licensed virtual asset trading platform and their ultimate owners must fully comply with all regulatory requirements and licensing conditions of the Securities and Futures Commission. These applicants should not actively promote services or establish business relationships with new retail customers before being officially licensed.
Residents of Mainland China are not allowed to use
The China Securities Regulatory Commission reminds all virtual asset trading platforms and their ultimate owners to comply with all applicable laws and regulations, including preventing mainland Chinese residents from using their virtual asset services. Platforms need to take all necessary measures to ensure that their controlling entities and related parties comply with relevant laws.
If found to be illegal, the application will be rejected immediately
The deemed licensed arrangement seeks to balance investor protection and market development. However, this arrangement is only temporary and the CSRC will quickly reject relevant license applications if any breach of key regulatory requirements for investor protection is found.
In the next few months, the China Securities Regulatory Commission will conduct on-site inspections of applicants for licensed virtual asset trading platforms, focusing on inspecting the protection of their client assets and the implementation of customer understanding procedures. The results of the inspection will affect the license application process. If any violations are found, the China Securities Regulatory Commission will quickly reject the relevant application and take corresponding regulatory actions.
The China Securities Regulatory Commission’s statement sets clear rules and expectations for the operation of virtual asset trading platforms, aiming to protect the interests of investors while promoting the healthy development of the market. Investors and platform operators should pay close attention to relevant regulations and the latest trends from the China Securities Regulatory Commission to ensure compliance operations.
Taiwan’s special law will be postponed until next year
Compared with Hong Kong's legislative efficiency, Taiwan's special law, originally expected to be introduced in September, will be postponed until next year and then submitted for review. In fact, there is still a long way to go before the days of industry regulation and investor protection are reached.
