Implemented from June! Hong Kong introduces virtual asset service provider licensing system

In the "Chief Executive's 2022 Policy Address", the Hong Kong SAR government proposed to continuously enhance the competitiveness of financial technology, including the draft introduction of a statutory licensing system for service providers in virtual assets. The Hong Kong Securities and Futures Commission (SFC) will officially implement the new licensing system for virtual asset service providers on June 1. It is believed that the trend of virtual asset trading will continue under good supervision and a highly transparent market.
At present, the virtual asset market is increasingly integrated with the traditional financial market, and it is even more necessary to implement effective supervision of the virtual asset industry. Therefore, Hong Kong is actively planning to introduce a virtual asset service provider licensing system and become a leader in innovation with a forward-looking vision. Specifically, what does the virtual asset service provider licensing system include?
Licensing system for virtual asset service providers
1. Requirements for applying for a license
According to the Anti-Money Laundering Financing (Amendment) Bill 2022, the SFC can only issue licenses to the following applicants:
(1) The applicant is a corporation and is a company as defined in Section 2(1) of the Companies Ordinance (Cap. 622) or a registered non-Hong Kong company
(2) SFC is satisfied that:
The applicant is a fit and proper person to be licensed for the relevant virtual asset services
At least 2 persons apply to serve as responsible officers of the applicant, each of whom is a fit and proper person associated with the business of providing relevant virtual asset services
Each director of the applicant (other than the responsible person) is a fit and proper person connected with the business of providing relevant virtual asset services
The owner of the applicant corporation is a fit and proper person connected with the business of providing relevant virtual asset services
An application has been made for seeking SFC approval of premises for the storage of records or documents
2. Transition period arrangements
In order to provide reasonably sufficient time for virtual asset trading platforms currently operating in Hong Kong to apply for licenses or wind up in an orderly manner, the Hong Kong government provides transitional arrangements.
For trading platforms that have been operating in Hong Kong and have established meaningful and substantive businesses before June 1, 2023, including platform operators licensed under the Securities and Futures Ordinance, and those operating under the Securities and Futures Ordinance. Applicants for virtual asset trading platforms that conduct business with non-security tokens may participate in the transitional arrangement if they are eligible.
At the same time, the conditions set out in Schedule 3G of the Anti-Money Laundering Financing (Amendment) Bill 2022 must be met before they can continue to operate in Hong Kong from June 1, 2023 to May 31, 2024, and will start from 2024 Starting from June 1, it will be subject to the virtual asset service provider licensing system.
Companies planning to provide virtual asset services in Hong Kong after June 1, 2023 must apply to the SFC in advance and obtain a license.
3.Double license
After the virtual asset service provider licensing system is officially implemented, the SFC will supervise security token exchanges conducted by virtual asset exchanges in accordance with the Securities and Futures Ordinance. Fund Raising (Amendment) Bill" regulates non-security token exchanges conducted by virtual asset exchanges.
Considering that the nature of virtual assets may evolve over time, such as changing from non-security tokens to security tokens, in order to avoid violating the requirements of any licensing system, virtual asset exchanges should comply with both the Securities and Futures Ordinance and The Anti-Money Laundering Financing (Amendment) Bill 2022 has obtained dual licensing and approval from the SFC.
SFC has simplified the application process for this purpose. It only needs to submit a comprehensive application form online and indicate that it is applying for both licenses at the same time. SFC CEO Liang Fengyi said that the SFC will issue clearer licensing guidelines for virtual asset trading platforms in May.
Virtual assets are an important part of the Web3 ecosystem, and Hong Kong is also actively promoting the development of Web3.
Hong Kong promotes Web3 development
1. Create a Web3 ecosystem
Hong Kong Cyberport brings together more than 1,900 start-ups and technology companies, including many Web3-related technology companies, covering many fields such as finance, smart life, and digital entertainment.
Cyberport established the "Cyberport Web3 Base" at the beginning of the year to more effectively seize the development opportunities of Web3 and better gather Web3 start-ups and talents from around the world to come to Hong Kong. It was also announced in the newly released "Financial Budget" that HK$50 million will be allocated to Cyberport to organize large-scale international seminars, promote cross-sector business cooperation and organize more youth workshops to accelerate the promotion of Hong Kong's Web3 ecosystem. development of.
2. Launch the Web3Hub Acceleration Plan and Ecological Fund
Hong Kong's Web3Hub has also recently launched the "Web3.0 Global Acceleration Program" with a total amount of US$10 million. In the first phase, it plans to invest US$1 million with MultiChain to provide related project services and support to Web3 entrepreneurs who are willing to come to Hong Kong for development.
At the same time, it also initiated the establishment of the "Hong Kong Web3.0 Ecological Fund" with a scale of US$100 million to support global Web3 companies to develop in Hong Kong and promote the development of the global Web3 ecosystem. It also hopes to improve the connection between Web3 and the real economy and the real environment in the future, and respond to Hong Kong's response. The government supports the call of the Web3 industry.
The Hong Kong government has been working tirelessly to introduce a variety of policies to enable financial technology companies in Hong Kong to better use Hong Kong as a platform to develop related businesses and promote the steady development of the market, so as to jointly welcome the huge opportunities brought by the development of the virtual asset industry and Web3!