Webinar | Licensing Regimes for Virtual Asset OTC Services & Stablecoin Issuers | 30 September 2024

The webinar discussed the proposed regulatory frameworks for virtual asset OTC services and stablecoin issuers in Hong Kong. The Hong Kong government aims to address money laundering and terrorist financing risks linked to virtual assets under the Anti-Money Laundering and Counter Terrorist Financing Ordinance (AMLO).

A licensing regime was implemented for virtual asset trading platforms (VATP) in June 2023, requiring operators to be licensed by the SFC and comply with AML/CTF provisions, limiting retail trading to major assets like Bitcoin and Ether. However, this regime does not cover over-the-counter (OTC) virtual asset trading, prompting new proposals for licensing these services under the Commissioner of Customs and Excise (CCE).

Licensing requirements for OTC services include stringent eligibility criteria and AML/CTF compliance, with enforcement powers granted to CCE. For stablecoins, a proposed regime focuses on fiat-referenced stablecoins to mitigate monetary and financial stability risks, requiring issuers to hold proper reserve assets and meet the HKMA's stringent conditions.

The proposed regimes emphasize investor protection by imposing severe penalties for non-compliance and plan transitional periods to integrate existing operators. Additionally, the HKMA introduces a sandbox initiative for testing stablecoin business models, with three participants already admitted. The overall aim is to foster safe virtual asset innovation and ensure regulatory alignment with global standards.

#VirtualAssets #HongKongRegulation #StablecoinIssuers

Timecodes:
00:00 Introduction to Hong Kong's Virtual Asset Licensing Regime
01:57 Background and Development of Hong Kong's Regulatory Framework
03:31 Licensing Regime for Centralized and OTC Trading Platforms
05:20 Eligibility and Compliance Requirements for OTC Licenses
06:58 Operational and Trading Conditions for OTC Services
08:42 OTC License Transition and Sanctions
15:12 Regulatory Framework for Stablecoin Issuers
18:30 Definition, Licensing, and Regulation of Stablecoins
28:10 Risk Management and Compliance for FRS Issuers
33:25 HKMA's Oversight and Licensing Conditions for FRS Issuers
38:44 FRS Issuance, Market Operations, and Licensing Renewal
45:44 International Cooperation and Flexible Regulatory Adjustments
50:48 Sanctions, Transitional Arrangements, and Public Awareness
54:24 Conclusion and Future Developments

Charltons Law Firm:
https://www.charltonslaw.com/

Julia Charlton
https://www.charltonslaw.com/the-firm/people-culture/team-profile/julia-charlton/

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