Hong Kong seeks power to jail unlicensed bitcoin trading as city looks to combat money laundering via crypto-exchanges
- Hong Kong will hand out US$644,054 fine and prison terms for unlicensed trading activities
- Exchanges and start-ups expect smaller players to quit as the city will only permit trading by professional investors
Crypto-exchanges and start-ups welcomed Hong Kong’s move to introduce mandatory licensing for all virtual asset service providers and jail time for rogue players, saying that the proposal will likely deter non-compliant players and reduce competition.
While the government has affirmed its initial position of subjecting crypto-exchanges to the licensing requirements of the Securities and Futures Commission (SFC), it has also added details on how it will enforce and implement the regime. It hopes to introduce an amendment bill into the city’s legislature during its 2021 to 2022 session.
Most notably, it has proposed imposing a HK$5 million (US$644,054) fine and up to seven years of imprisonment as a deterrent against non-compliant and unlicensed activities. Those that flout the AML and counterterrorist financing requirements will face a fine of HK$1 million and up to two years in prison.
Hong Kong’s licensing regime underlines how the city has taken a different regulatory approach from that of mainland China in its bid to balance investors’ protection against supporting innovation. About a dozen of crypto-exchanges have offices in the city.