How to get a cryptocurrency license in Hong Kong
Hong Kong is one of the biggest international hubs. Over the years, it has become one of East Asia’s leading places to work with financial assets. With the amendments being made in June 2022 to “Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022”, Hong Kong, de facto, legalized Virtual assets (VA) and operations with it, which provides opportunities for companies to start their activities in the new jurisdiction.
History of regulation of virtual currency in Hong Kong
Since 2014, virtual currencies have been recognized as “virtual goods” in Hong Kong. Therefore, transactions with such “virtual goods” are not subject to regulation by Hong Kong financial regulators such as the Hong Kong Monetary Authority (HKMA) or the Securities and Futures Commission (SFC). In some cases, specialized rules govern an Initial Coin Offering (ICO) by equating tokens to securities. There is also a law regulating KYC/AML procedures.
Sphere of regulation of new law
The object of regulation is “virtual assets,” defined as a cryptographically protected “digital representation of value,” which has the following characteristics:
- It is expressed as a unit of account or a store of economic value either is used, or intended to be used, as a medium of exchange accepted by the public for payment for goods or services, for the discharge of a debt, and/or for investment; or provides rights, eligibility or access to vote on the management, administration or governance of the affairs in connection with, or to vote on any change of the terms of any arrangement applicable to, any cryptographically secured digital representation of value; and
- It can be transferred, stored, or traded electronically.
Currently, the Bill regulates only the operation of virtual asset exchanges (Virtual asset service providers (VASP)), where:
- Offers for the sale or purchase of virtual assets are regularly made, or on which participants regularly negotiate for concluding transactions for the sale or purchase of virtual assets;
- The customer’s money or virtual assets are transferred directly or indirectly to the person providing such a service.
Requirements and procedures for obtaining a crypto license in Hong Kong
For today, not all SFC requirements are known, but from the analysis of the new Law the following conclusions can be made:
Requirements for a company to obtain a cryptocurrency license in Hong Kong:
- The company must be registered in Hong Kong;
- The company must have at least two Responsible Officers (RO), at least one of which must be a resident of Hong Kong;
- The beneficiaries and ROs of the company must pass an eligibility check;
- The company must have an AML/KYC Policy;
- The share capital must be contributed.
The procedure for obtaining a crypto license:
- Registration of a company and fulfillment of all the conditions of the regulator for obtaining a license;
- Registration of the application in the SFC;
- Passing the test for compliance with the requirements of the regulator by the company;
- Verification of the ultimate beneficiaries of the company (UBO) and RO for compliance with the requirements of the regulator
- Issuance of a license.
Benefits of obtaining a crypto license in Hong Kong
As the regulation of the crypto sphere is new for Hong Kong, the SFC has given privileges to companies registered before March 01, 2023. Such companies, unlike those incorporated after the entry into force of the Law, get the opportunity to continue working during the transition period, which will last until December 01, 2023, and which will include the period required for the process of considering the license application by the regulator, which would give a great advantage to a business. Thus, registering a company right now is an excellent opportunity to quickly start a crypto business in the
If you want to get a cryptocurrency license in Hong Kong — please contact SBSB Fintech Lawyers. Since 2013, we have been working with the FinTech and Crypto areas, offering individual solutions to each client, considering his company’s business model. Our experts will help you choose the best type of license and prepare a package of documents, legalizing the crypto business by following the laws of Hong Kong and providing full legal support.
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