VASP license in Hong Kong

On June 24, 2022, jurisdiction governmental authorities released Anti-Money-Laundering and Terrorist-Financing (AML/FT) Order; it established licensing and regulatory norms demanding to possess VASP license in Hong Kong. Let us consider it in more detail and find out how it affects firms operating in this industry. The draft law amended the AML and CFT Order, main of which was implementation of licensing-getting and obligations for VASPs. These changes’ll come in force on March 1, 2023, and virtual-asset-providers will be provided with nine months to organize their operations in accordance with rules set out.

VASP-investors in jurisdiction will be provided with greater protection than investors in other countries. Applicant firms and governance-structure and commercial-model points of the candidate will be assessed to be more credible.

The main difference between the new VASP-regime and active ground for virtual-asset-trading platform-operators is current norms only applied to VASPs that traded one security-token. Such norms were previously voluntary, and the operator had to agree to fall under the supervision of the SFC. For now, the SFCs have the power to take over all VASPs.

Crypto-exchange license in Hong Kong

A company intending to manage crypto-currency exchange operations must apply for a Virtual Asset Services Providers (VASP) licensing in Hong Kong. Conditions 3B of Amendment-Law states virtual asset-exchange transaction is stated as services provision by e-means, while:

• purchasing and sale of digital currency accepted in such a way as to form or accurately lead to a transaction;
• daily negotiations and conclusions of operations for sale or purchase of virtual assets so as to form or lead to binding deals, when client’s finances pass in indirect owning of director or individual spreading such services.

Virtual assets scope includes:

• bitcoin;
• altcoins;
• stablecoins;
• certain government tokens.

Outside the region are:

• financial assets regulated by SFO;
• stored-value funds regulated by Stored Value Funds Order;
• closed-loop, limited-use assets inherently non-transferable, exchangeable, and fungible.

Requirements for Hong Kong VASP licensing

1. Candidates have a local registration with constant work-place in jurisdiction or work in another city, but being established locally.
2. Candidates need to meet all points to obtain a license to provide virtua- asset-services.
3. There need to be 2 people who meet the requirements to be Officers in Charge (RO).
4. Firms are permitted to work with vocational capital-holders (anyone who does not meet the criteria of professional capital-holder will be blocked from accessing the platform).

Additional conditions for obtaining license for crypto-currency exchange in Hong Kong, which are imposed by SFC.

1. Availability of financial resources.
2. Business-reliability.
3. Maintaining accounting records and license documentation.
4. Provision of contract notes, receipts, account statements and notices by licensed-suppliers and their interacting organizations.
5. Financial reports and other documentation.
6. Prevention of interest contradiction.
7. Auditor’s report.
8. Business conduct of licensed suppliers and their licensed representatives.
9. Notice of changes.
10. Development and implementation of cybersecurity policies.

Implications for existing VASPs

If VASP already operates an exchange in Hong Kong, then they’re required to obtain a license in shortest time-period. If they do not have the appropriate permission before March 1, 2024, they need to stop their deals. If VASPs in Hong Kong without an SFC license operate an exchange-structure not in jurisdiction and sell its offers to clients locally, this’ll also be considered an AMLO violation. Licensed-VASPs need to stop providing their offers to all clients as they’ll now be able to work with vocational capital-holders. VASP with license Hong Kong will also need to turn away customers in jurisdictions banning cryptocurrencies in order to avoid potential regulatory issues.

Main criteria for successful licensing of cryptocurrency exchange in Hong Kong

• Stable and secure business model.
• Technological compatibility of the platform with SFC.
• History and financial stability.
• Reliability and good documentation of processes and internal control.
• Well structured risk management system.

If you want to get a VASP license in Hong Kong, please contact our specialists. Our company is ready to provide you with comprehensive multidisciplinary assistance. We have vast experience and professional skills in working with crypto-currency businesses. Additionally, we offer a variety of ready-made companies and licenses for sale, among which you are sure to find the best option for your commercial development.

You can see our current offers in the categories “Cryptocoins and licensing of cryptocurrency operations”, “Ready-made companies”, “Banks for sale” and “Licenses for sale”.