Last week, Hong Kong's Securities and Futures Commission (SFC) stated in the Fintech Week that all cryptocurrency trading platforms operating in HK, or targeting HK investors, will be required to be regulated, even if they don’t trade securities.
This is a step further to the opt-in approach of last November which required virtual asset trading platforms operating in Hong Kong and offering trading of at least one security token may apply to be licensed by the SFC. [1]
"Once this new regime is in place, all virtual asset trading platforms in Hong Kong would be regulated, supervised and monitored under one of two regimes: the existing opt-in framework we introduced last year, or the proposed new licensing approach being announced today," Ashley Alder, CEO of SEC said in the speech, “Failure to do so would be an offence”. [2]
In the speech, he emphasized that successful licensed companies would be subject to expectations covering their financial resources, experience and the soundness of their business and risk management. Last year’s Position paper also highlighted that a crypto exchange needs to comply with all relevant KYC requirements and to establish and implement appropriate AML/CFT policies, procedures and controls. [3]
In the background of the growing popularity of cryptocurrencies and the increasing number of reports about fraud or criminal activities on crypto exchanges or trading platforms, this asset attracts great interests both from the investors and the regulators. Therefore, it is becoming essential for crypto businesses to have a robust tool for their risk management to answer the regulatory requirements.
As the European leader in crypto transaction monitoring and surveillance tools, Scorechain is trusted by more than 100 customers in 29 countries. With Scorechain’s full customizable risk-AML scoring system, compliance teams can apply the risk-based approach required by the international compliance standards to have better risk control.
Besides, Scorechain is the first crypto AML provider to read through Decentralized Exchanges (DEX) transactions to prevent money laundering and terrorism financing. This great feature was recently launched and showcased in the HK Fintech Week event. It attracted a lot of attention especially in the context of Decentralized Finance (DeFi) is widely used today and became very popular in the past few months. Read this article to know more about Scorechain’s Dex trade reading feature: https://bit.ly/3mVje92
Does your firm operate in HK or target investors there and need to be compliant? Contact us to know more about our crypto risk-AML solution: contact@scorechain.com
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References:
Announcement: SFC adopts new approach to virtual asset trading platforms, 6 Nov. 2019↩
https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=19PR105
2. Fintech: the regulatory response to evolving challenges, Keynote address at Hong Kong FinTech Week, Ashley Alder, 3 Nov. 2020↩
https://www.sfc.hk/-/media/EN/files/ER/PDF/CEO_speech_FinTechWeek_Nov2020.pdf
3.Position paper Regulation of virtual asset trading platforms 6 Nov. 2019 ↩
