New crypto regulations in Hong Kong could result in increased crime, crypto exchanges warn.

Hong Kong’s proposed rules on licensing virtual money platforms could encourage financial crime, say OKCoin, BitMEX, and Coinbase.

According to the South China Morning Post report, cryptocurrency exchanges are on tenterhooks as they await the outcome of a proposal by Hong Kong’s government to ban retail investors from trading in the city, at a time when cryptocurrencies are winning acceptance as mainstream forms of payment and market leader bitcoin rises to a record level. The city’s Financial Services and the Treasury Bureau published the proposal to limit trading in cryptocurrencies to professional investors back in November last year.

 

The government plans to turn the proposal into a bill.

After consulting with industry bodies and public members that ended in January, the government plans to turn the proposal into a bill and introduce it to the city’s legislative council later this year. The bill in question also includes a proposal to widen due diligence on politically exposed persons to anywhere outside Hong Kong, bringing officials from mainland China into range amid an ongoing anti-corruption drive across the country. If Hong Kong bans retail investors from trading cryptocurrencies, they will turn to unregulated platforms out of reach of the law, according to cryptocurrency exchanges BitMEX, Huobi, OKCoin, and Coinbase.

 

New crypto regulations are in line with recommendations by FATF. 

The Financial Services and the Treasury Bureau proposed in the consultation paper to widen the scope of the city’s anti-money-laundering and the counter-terrorist financing ordinance to include crypto exchanges, part of the government’s efforts to comply with commendations by Paris-based Financial Action Task Force (FATF). However, the proposal to limit cryptocurrency trading to professional investors goes further than many other jurisdictions. Major cryptocurrencies are becoming mainstream methods of payment. Mastercard has recently said that it will start supporting select cryptocurrencies directly on its payment network later this year. 

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Jai Pratap
Jai Pratap
A Mass Media Graduate who loves to write. Jai is also a sports enthusiast and a big movie buff. He loves to learn new things.

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