Hong Kong Sets License Application Deadline for Virtual Asset Service Providers, Plans to Enforce Strict Regulations
Summary:
The Hong Kong government sets a February 29 deadline for unapproved virtual asset service providers (VASPs) to submit their license applications, otherwise, they must cease operations by May 31. The Securities and Futures Commission (SFC) is preparing to enforce this regulation and warn investors about the risks of volatile virtual assets. The government is also considering regulating over-the-counter (OTC) trading venues as part of an upcoming regulatory framework.
The Department of Financial Services of the Hong Kong administration drew attention to the February 29 cut-off for applications from uncertified virtual asset service suppliers (VASPs), stipulating that those not sanctioned should halt activities by May 31. Christopher Hui, Secretary for Financial Services and the Treasury of Hong Kong, noted in an official blog entry that several VASPs commenced operations in Hong Kong prior to the introduction of a licensing system by the Securities and Futures Commission (SFC), necessitating a transition phase permitting VASPs to apply for a license. Hui clarified, "Meanwhile, if such service providers wish to maintain their Hong Kong operations, they must submit their licensing applications before this year’s February 29." As per the regulatory body, current service providers unable to comply with the SFC's stipulated requisites will receive a "non-deeming notice", mandating them to discontinue operations by May 31, or three months post-receiving the notice. Furthermore, all ongoing service providers failing to submit their applications by Feb. 29 must cease operations by May 31. With the submission deadline for license applications nearing, the SFC is initiating enforcement measures, including sending notices to rejected service providers and strengthening their publicity efforts, Hui noted. He also cautioned investors about the instability and value of virtual assets, stating that a large number of digital assets carry "no inherent value" accompanied by unstable prices. He advised, "Before investing, understanding the specifics and considering the associated risks is crucial. For Virtual Asset deals, only those platforms officially certified by the SFC should be utilized." Unauthorized operators and service providers may not conform to regulatory norms and such platforms "may also have associations with fraudulent activities," the official warned. Additionally, he mentioned that over-the-counter (OTC) trading venues are also under consideration for regulation as some of them were linked to fraudulent incidents on trading platforms in 2023, initiating a consultative process on a suggested regulatory framework.
Published At
2/2/2024 3:54:00 PM
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