One of the most attractive countries for cryptocurrency activities is Hong Kong. This is due to the fact that the legislation of this country has adapted to the challenges of today. The country’s economy and the development of infrastructure and technology only contribute to this. An important development was the fact that in 2022 the Law on the introduction of measures to prevent money laundering and financial terrorism was adopted.
The sphere of regulation of the Law
This law regulates virtual assets (VA), characterized as a unit of account or a method of exchange of cryptocurrency, as well as the transfer, storage or sale of cryptocurrency electronically.
As of today, the Law regulates the work of virtual exchanges (Virtual asset service provider (VASP), according to which work is regularly carried out on the purchase/sale of virtual assets.
Virtual assets in Hong Kong are divided into two types:
- Security tokens. That is, these are almost analogues of securities with which you can trade on exchanges.
- Virtual goods. This is the cryptocurrency itself, such as Bitcoin.
Hong Kong law does not recognize cryptocurrency as a payment instrument, that is, it is not considered a means of payment.
Requirements for opening a crypto exchange in Hong Kong
- A company wishing to open an exchange must be registered in Hong Kong
- There must be at least two founders of the company, one of whom must be a resident of Hong Kong
- The final beneficiaries and RO of the company must undergo a full eligibility check. Such verification includes obtaining information about the absence of criminal records from the company’s management and ultimate owners.
- The company must have an AML/KYC policy;
The procedure for obtaining a crypto license in Hong Kong
- The company must fulfill all mandatory conditions applicable to the opening of the company
- Submit an application and register it with the SFS
- The company must pass a test to ensure that it meets all the requirements of the regulator
- The ultimate beneficiaries and owners of the company must also be fully vetted for regulatory compliance
- If all the above conditions are met, the company receives a cryptocurrency license
Where to apply
The authority responsible for issuing a cryptocurrency license in Hong Kong is the Securities and Futures Commission (SFO).
It is worth noting that if the company plans to exclusively exchange cryptocurrency through exchangers, then in this case a license is not required. But if the activity will be broader and will concern security tokens, then in this case a license will have to be obtained.
- Offer tokens classified as securities only to professional investors
- Carry out regular verification of cryptoassets to assess the risks of market participants
- Comply with all provisions related to AML/KYC
- Disclose important information about security tokens
- It is mandatory to report suspicious transactions with cryptocurrency to the regulatory authorities.
Advantages of Hong Kong Cryptocurrency License
Regulation of the cryptocurrency sphere for Hong Kong is a new and not yet well-understood way of doing business. But companies registered before January 1, 2023 have a number of benefits and advantages. Such companies are able to operate during the transition period of the Law. Therefore, the sooner a cryptocurrency company opens in Hong Kong, the sooner it will bring good financial results for the company
But it is worth noting that, as in other European countries, in Hong Kong, the regulation of cryptocurrency licensing depends on the type of activity and the type of license that will be chosen. But in order to obtain a license for cryptocurrency in Hong Kong, it is not necessary to forget about the legal side of this issue. After all, in order to quickly obtain a license, it is necessary that all the necessary documents meet the legal requirements of Hong Kong. And for this, it is not necessary to neglect the legal support of proven lawyers. Timely and high-quality legal assistance is the key to success.