Hong Kong Gears Up to Regulate OTC Crypto Venues Imminently

Jonathan Stoker Feb 02, 2024, 14:20pm 68 views

Hong Kong Gears Up to Regulate OTC Crypto Venues Imminently

Hong Kong to Consult on Over-The-Counter Crypto Framework

The government of Hong Kong has announced plans to begin consultation on a proposed framework for over-the-counter (OTC) cryptocurrency venues. This consultation is set to commence in the near future and will focus on virtual-asset (VA) outlets such as stores and online platforms, as expressed by the Financial Services and the Treasury Bureau (FSTB).

OTC Venues Role in Fraud Cases

The FSTB notes that OTC venues played a significant part in several fraud cases involving unlicensed VA trading platforms in the past year. These venues led investors to funnel their resources into unauthorized platforms. As a result, they believe regulating OTC venues is a necessary step towards protecting investors and ensuring market integrity.

Proposed Regulatory Framework and Licensing Regime

The FSTB stated its intentions to launch a consultation on the proposed regulatory framework soon. This follows their earlier announcement in October, where they expressed a desire to establish a vibrant sector and ecosystem for virtual assets by regulating the industry. The bureau had previously established a licensing regime for crypto companies that became effective last year. To continue their operations, these companies must obtain approval before June this year.

Regulation Proposal for Stablecoin Issuers

Apart from the OTC venues, Hong Kong is also focusing on a regulatory regime for stablecoin issuers. The proposed regulatory system would mandate that fiat-backed stablecoin issuers procure a license from the Hong Kong Monetary Authority.

Edited by Jonathan Stoker

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