The new law will introduce a licensing system for infrastructure service providers, requiring them to comply with strict anti-money laundering and anti-money laundering laws.
Hong Kong’s Legislative Council has passed new amendments to the Anti-Money Laundering (AML) and anti-terrorist financing system including infrastructure service providers.
The latest legislation will establish a new licensing system for infrastructure service providers, which will take effect on June 1, 2023. The new amendment will subject crypto exchange service providers to the same rules followed by traditional financial institutions.
This means that exchanges that want to open a business in Hong Kong must go through strict AML guidelines and investor protection laws before they are allowed to operate. Unlike many other regulators around the world, Hong Kong used the FTX failure as a way to reduce the regulatory risk associated with a central exchange.
Following the collapse of the crypto exchange FTX, regulators around the world have faced public outrage for their failure to protect retail investors. There has been a growing demand to regulate crypto exchanges and service providers and subject them to anti-money laundering laws and financial protections required by investors.
In a recent conference, the director of the Hong Kong Monetary Authority, Eddie Yue, said that investor protection laws may come to the country soon. Recent changes in the law pushed the country to be the first player in the important problem of investor protection.
Hong Kong is working hard to establish a well-thought-out regulatory framework for the emerging crypto market. The Hong Kong government issued a policy proposing risk-based regulatory and regulatory guidelines in October under the title “Regulation and Development of Financial Stability”. The government has proposed several pilot projects to explore and improve the technologies underlying virtual assets.
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