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Post: Regulating OTC Virtual Asset Trade in Hong Kong: Enhancing Transparency and Security

Regulating OTC Virtual Asset Trade in Hong Kong: Enhancing Transparency and Security

Key Points:

  • The Hong Kong government plans to tighten regulation of the over-the-counter (OTC) virtual assets trade.
  • A consultation paper has been published, and the consultation period will last two months.
  • The primary suggestion is to include OTC trade under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).
  • If implemented, the new regulations would be effective from June 2023.

Regulating OTC Virtual Asset Trade in Hong Kong

The Hong Kong government has announced plans to tighten regulation of the over-the-counter (OTC) virtual assets trade. A consultation paper has been published, allowing stakeholders to provide feedback on the proposed regulations. The consultation period will last for two months, concluding on April 12. The primary suggestion in the paper is to include OTC trade under the jurisdiction of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).

Typically, OTC trade refers to deals conducted directly between the provider and the customer, without the involvement of a centralized marketplace like an exchange. By subjecting OTC virtual asset trade to the same requirements as retail virtual asset trade, the Hong Kong government aims to enhance anti-money laundering and counter-terrorist financing measures in the industry. If implemented, the new regulations would be effective from June 2023.


Hot Take

The move by the Hong Kong government to tighten regulation of the OTC virtual assets trade is a significant step towards enhancing transparency and combating illicit activities in the cryptocurrency industry. By subjecting OTC trade to the same anti-money laundering and counter-terrorist financing requirements as retail trade, the government is taking a proactive approach to address potential loopholes and protect investors. These regulations, if implemented effectively, could contribute to the overall security and legitimacy of the virtual assets market in Hong Kong.

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