Hong Kong officials announce Q1 2023 crypto bill to address rapidly expanding market

Shortly after Hong Kong’s regulators announced the possibility of allowing retail investors to participate directly in investing in cryptocurrencies, the territory’s government is now reportedly working on a crypto bill that would set clear policies to support the market’s expansion.

Indeed, the bill pertaining to the cryptocurrency regulation is expected to be passed in the Legislative Council in the first quarter of 2023, according to Liang Hanjing, director of financial technology at InvestHK – the city’s government department for foreign direct investments, as Baidu reported on October 22.

His announcement arrives shortly after Hong Kong’s finance secretary Chen Maobo and treasury department secretary Xu Zhengyu had informed the public about the expected release of clear policies on crypto assets during the Hong Kong Fintech Week that will open on October 31.

What is the purpose of the bill?

According to Lian Hanjing, the government aims to “establish a licensing system for virtual asset service providers (VASPs),” considering that there are already such platforms operating in Hong Kong and that such transactions carry money-laundering risks. 

As he further explained:

“Any person operating a business providing virtual asset services in Hong Kong, or actively promoting virtual asset services to the Hong Kong public, must submit to The Hong Kong Securities and Futures Commission [that it] has applied for and obtained a VASP license in advance, and [that it] abides by the relevant anti-money laundering and anti-terrorist financing laws and regulations.”

Liang Hanjing expects that the bill containing this amendment will be passed in the city’s Legislative Council in the first quarter of 2023. By then, he believes that more VASPs will apply for licenses from regulators, and that cryptocurrency trading in Hong Kong would “flourish.”

Fighting for the position of the crypto leader

As Finbold earlier reported, the government of Hong Kong is considering permitting retail investors to participate directly in investing in digital assets. With this consideration, it assumes a separate stance from that of mainland China amid the fintech exodus that is giving Singapore an edge as the crypto industry hub.

Now it seems that the territory’s authorities are easing their stance on the industry, months after announcing that the upcoming Anti-Money Laundering and Counter-Terrorist Financing Bill would include an amendment introducing hefty monetary and prison fines for unlicensed crypto businesses and their advertising.