The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, which introduces a new licensing regime for Hong Kong Virtual Asset Service Providers (HK VASPs), was passed by Hong Kong Legislative Council on 7 December 2022. The new commencement date of the bill will be 1 April 2023, while the commencement date of the licensing regime for HK VASPs is postponed by 3 months to 1 June 2023. The new timeline allows the existing VA exchanges operating in Hong Kong immediately before 1 June 2023 to continue to operate without a VASP licence for up to 12 months. If they want to continue operation after 31 May 2024, they will have to apply to the Hong Kong Securities and Futures Commission (the SFC) for a VASP licence. Provided that an existing VA exchange submits its licence application to the SFC on or before 29 February 2024, the VA exchange will be able to continue to operate after 1 June 2024 under a deemed licence if its licence application is still pending until the earlier of: (i) the SFC’s grant or refusal to grant a licence; and (ii) withdrawal of the licence application.
The SFC also issued a statement a few days after the passage of the above bill, which serves as a reminder for investors of the potential risks associated with virtual asset “deposits”, “savings”, “earnings” or “staking” services (VA Arrangements) provided by the Hong Kong VA platforms. In its statement, the SFC raises concerns about the continued prevalence of these VA Arrangements and the recent collapse of some VA platforms. The SFC warns that investors may suffer substantial loss or even total loss for investing in these arrangements.
