Hong Kong Introduces New Regulatory Framework For Cryptocurrency Exchanges

According to Odaily, Hong Kong is implementing a new regulatory framework for cryptocurrency exchanges, with only nine licensed exchanges currently operating, primarily serving professional investors. Hong Kong Legislative Council member Ng Kit Chuang announced that the region will introduce a licensing system for over-the-counter (OTC) cryptocurrency trading this year. The new system will require OTC platforms to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations under the Anti-Money Laundering Ordinance. Licensed entities will be permitted to conduct spot trading between virtual assets and fiat currencies. They must also register and monitor business wallets and transaction records. The Customs Commissioner will act as the regulator, responsible for license approval, routine inspections, investigating violations, and imposing penalties. Violators could face fines of up to HKD 1 million or two years of imprisonment. Regarding KYC certification, the government suggests verifying customer identities, assessing and recording the purpose and nature of customer transactions, and continuously monitoring trading activities.