Hong Kong is moving to formalize oversight of the digital asset sector through proposed amendments to its anti-money laundering framework. Under the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, the city would introduce a licensing regime for virtual asset service providers (VASPs), placing crypto-related businesses under a clearer regulatory structure.
Licensing plan targets crypto trading platforms
If approved by the Legislative Council, the bill would require entities seeking to operate virtual asset trading platforms in Hong Kong to obtain a license from the Securities and Futures Commission (SFC). The proposal also includes a registration framework for dealers in precious metals and stones, with the broader objective of extending AML and counter-terrorist financing obligations to both sectors.
The draft aligns with recommendations from the Financial Action Task Force (FATF), the global standard-setter in anti-money laundering policy. That means VASPs would be expected to meet compliance standards comparable to those applied to traditional financial institutions, including financial adequacy and operational controls. Bitstamp Asia Pacific managing director Andrew Leelarthaepin said this signals official recognition of crypto firms as part of Hong Kong’s financial system.
SFC oversight would go beyond licensing
Under the proposed regime, the SFC would also monitor whether VASPs maintain proper listing and trading policies, financial reporting, and disclosure procedures. The regulator would additionally oversee safeguards aimed at preventing market manipulation and conflicts of interest.
The legislative push comes as Hong Kong’s latest Money Laundering and Terrorist Financing Risk Assessment Report gives special attention to risks and vulnerabilities in the crypto sector. While the report acknowledges the growing popularity and potential of virtual assets, it also highlights the challenges they create for investor protection and risk management.
If enacted, the framework would mark a significant step toward institutionalizing crypto regulation in Hong Kong. For firms with strong compliance capabilities, the new rules could improve legitimacy and market confidence. For smaller or less prepared operators, however, the compliance bar would become materially higher.