FX168 Financial News Agency (Europe) News Hong Kong South China Morning Post (SCMP) According to people familiar with the matter, Hong Kong is currently studying whether to let the Hong Kong Securities and Futures Commission (SFC) and the Customs and Excise Department (C&ED) work together to participate in the supervision of cryptocurrency over-the-counter (OTC) services.
People familiar with the matter revealed that the Hong Kong Securities and Futures Commission has consulted industry insiders on the implementation of a new licensing system for cryptocurrency over-the-counter services, and the securities regulator will work with the Hong Kong Customs and Excise Department to supervise these companies. Because the discussions were private, the person declined to be named.
Source: SCMP
The planned over-the-counter regulation and licensing was previously the exclusive remit of Hong Kong Customs. OTC services facilitate large-value cryptocurrency transactions directly and privately between two parties.
People familiar with the matter said that the Hong Kong Securities and Futures Commission has also consulted relevant companies in recent months on the introduction of a new licensing system for cryptocurrency custody services. They said that discussions on the two licenses are still in the early stages and may change.
"To promote the sustainable and responsible development of Hong Kong's virtual asset industry, the Hong Kong Securities and Futures Commission works closely with the government and other regulators to create a robust, clear and consistent regulatory environment in Hong Kong," a representative of the Hong Kong Securities and Futures Commission said in a statement on Wednesday (September 11).
Looking back to 2023, investors lost more than HK$1.7 billion in cryptocurrency scams. Hong Kong authorities proposed a maximum of two years in prison and a fine of HK$1 million for those who operate virtual asset trading shops without a license.
The Hong Kong Treasury Bureau launched a public consultation in February as part of its efforts to establish an over-the-counter virtual asset trading service licensing system. The proposal defines over-the-counter trading services as services involving spot trading of virtual assets.
The key points of the proposed legislation are as follows:
Require any person who provides any virtual asset and cash spot trading services in Hong Kong in the form of business to apply for a license from the Commissioner of Customs and Excise;
Cover all virtual asset OTC services, regardless of whether the services are provided through physical stores and/or other platforms;
Empower the Commissioner of Customs to monitor the compliance of licensees in combating money laundering and terrorist financing, enforce the statutory and regulatory requirements of the new system; and provide transitional arrangements to enable the effective implementation of the regulatory system.
However, some industry insiders have expressed concerns that since the SFC already regulates other areas of cryptocurrency investment, such as cryptocurrency exchanges and ETFs, it may cause confusion if all OTC shops and online trading platforms are brought under the supervision of the Customs.
