The Secretary for Financial Services and the Treasury, Christopher Hui, emphasised in a recent blog post the crucial deadline for unlicensed Virtual Asset Service Providers (VASPs) in Hong Kong to submit their licensing applications by 29 February.

Hong Kong’s risk-based regulatory approach for Virtual Assets (VAs), established on 1 June last year, mandates that VASPs meet stringent criteria to ensure investor protection and address money laundering and terrorist financing risks.

Under this regime, two platforms have already secured licenses to offer Bitcoin and Ethereum trading to retail investors. Hong Kong VASPs operational before the 1 June initiation of the licensing system were given a transitional period to comply, which ends on 29 February.

The Securities and Futures Commission (SFC) will review the applications, considering the providers’ adherence to regulatory standards and operational history in Hong Kong. Non-compliant service providers will receive a “No-deeming notice” and must cease operations by 31 May.

“Hong Kong’s approach to VAs focuses on risk-based, prudent regulation.  By adhering to the principle of “same activity, same risk, same regulation” and implementing comprehensive regulation, we seek to address the risks associated with VA activities regarding investor protection, money laundering and terrorist financing (ML/TF).  We firmly believe that encouraging financial innovation is only possible through providing a robust and transparent regulatory environment,”

said Christopher in the blog.

With the deadline approaching, the SFC is preparing for enforcement actions, including publicising licensed VA trading platforms to inform and protect investors.

Featured image credit: Edited from Unsplash