Effective June 1, 2024, all virtual asset trading platforms (VATPs) in Hong Kong must be licensed by the Securities and Futures Commission (SFC) or be deemed-to-be-licensed applicants, marking the end of the non-contravention period under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).
The SFC urges investors to trade only on SFC-licensed VATPs and to verify licensing status through the “List of licensed virtual asset trading platforms” on the SFC’s website. Deemed-to-be-licensed VATP applicants are not formally licensed and must demonstrate compliance with SFC regulations before obtaining formal licenses.
Deemed-to-be-licensed VATP applicants and their ultimate owners must fully comply with SFC regulatory requirements and licensing conditions. The SFC advises these applicants to refrain from actively marketing their services or onboarding new retail clients until they achieve full compliance. Furthermore, all VATPs must adhere to relevant laws, including restrictions on services to Mainland Chinese residents.
The deeming arrangement aims to balance investor protection and market development. However, any non-compliance with key regulatory requirements will result in the SFC refusing the license application and taking appropriate actions. The SFC plans to conduct on-site inspections to ensure compliance, particularly regarding client asset safeguarding and know-your-client processes.
Under AMLO, any entity providing virtual asset services in Hong Kong must apply for a license from the SFC. Pre-existing VATPs can continue operating until June 1, 2024, provided they meet deeming conditions and confirm compliance with SFC regulations. Deemed-to-be-licensed VATP applicants must undergo external assessments to verify the effectiveness of their policies and controls.
If a deemed-to-be-licensed VATP applicant’s license is refused, the SFC will require a plan for an orderly business wind-down, prioritizing client interest protection. These applicants are subject to the full range of SFC’s supervisory and disciplinary powers. By enforcing compliance and conducting thorough inspections, the SFC aims to maintain a secure and transparent trading environment.
Source : SFC website
