Hong Kong officials announce crypto bill for first quarter 2023 to address fast-growing market

Shortly after Hong Kong’s regulators announced the possibility of allowing retail investors to participate directly in investing in cryptocurrencies, the territory’s government is now reportedly working on a crypto law that will set clear guidelines to support the market’s expansion.

The bill related to the regulation of cryptocurrency is expected to be passed by the Legislative Council in the first quarter of 2023, according to Liang Hanjing, director of financial technology at InvestHK – the city’s government foreign direct investment department, which Baidu reported on October 22.

His announcement comes shortly after Hong Kong Finance Secretary Chen Maobo and Finance Ministry Secretary Xu Zhengyu informed the public of the expected release of clear guidelines for crypto assets during the Hong Kong Fintech Week which opens on October 31.

What is the purpose of the bill?

According to Lian Hanjing, the government aims to “establish a licensing system for virtual asset service providers (VASPs)”, considering that there are already such platforms operating in Hong Kong and that such transactions carry the risk of money laundering.

As he further explained:

“Any person who carries on a business that provides virtual asset services in Hong Kong, or actively promotes virtual asset services to the public in Hong Kong, must submit to The Hong Kong Securities and Futures Commission [that it] have applied for and received a VASP license in advance, and [that it] complies with relevant laws and regulations against money laundering and the financing of terrorism.”

Liang Hanjing expects the bill containing this change to be passed by the city’s Legislative Council in the first quarter of 2023. By then, he believes more VASPs will apply for licenses from regulators, and that cryptocurrency trading in Hong Kong will “boom. “

Fighting for the position of crypto leader

As Finbold previously reported, the Hong Kong government is considering allowing retail investors to participate directly in investing in digital assets. With this consideration, it takes a separate stance from mainland China, amid the fintech exodus that gives Singapore an advantage as a hub for the crypto industry.

Now, the territory’s authorities appear to be easing their stance on the industry, months after announcing that the upcoming Anti-Money Laundering and Counter-Terrorism Bill will include an amendment that would introduce hefty fines and jail terms for unlicensed crypto businesses and their advertising.