The Hong Kong government has been mulling over a ban on cryptocurrencies for several months. In the end, the government seems willing to go down the path of strict regulation. Those who don’t have enough money simply won’t be able to create a cryptocurrency wallet for themselves. And that’s in a country long considered to offer the most economic freedoms.
Can I buy Bitcoin in Hong Kong (legally)?
As explained by the Hong Kong Monetary Authority, bitcoin is not considered a legal tender, but a virtual asset that is not backed by a physical object, issuer or real economy and therefore has no fixed value. Bitcoin is not subject to regulation by the Hong Kong Monetary Authority.
Hong Kong Cryptocurrency Regulations on Taxes
Hong Kong taxes crypto currency based on its use, according to the newly released guidelines on taxation of cryptocurrency. According to this, if crypto is purchased for the purpose of long-term investment, it will not be subject to income tax.
However, for businesses, all profits made from trading crypto currency as a business activity will be taxed. For corporate tax purposes, cryptocurrency will be treated as a virtual commodity.
Hong Kong Seeks to Regulate Cryptocurrency Exchanges
The idea has surfaced before, with the autonomous administrative region’s financial market regulator proposing something similar last November. A Hong Kong-based cryptocurrency exchange advocacy group has challenged the proposal and related regulations.
This group even went so far as to state that the proposed law would push retail investors into unregulated platforms.
On April 21, the Hong Kong Financial Services and Treasury Bureau (FSTB) issued a notice of consultation on the proposal. It would have concluded that all cryptocurrency exchanges operating in their jurisdiction should be licensed. As it stands, crypto exchanges can choose to “register” and obtain their license in Hong Kong.
If the proposals are indeed adopted and materialize into law, the jurisdiction’s financial regulator will in turn apparently have ultimate power over the crypto industry in Hong Kong. The agency also argued that the proposal is in line with the recommendations of the Financial Action Task Force.
Hong Kong Cryptocurrency AML/CFT Laws & Regulations
The Hong Kong Monetary Authority is responsible for the stability of the banking system and monetary policy in Hong Kong. Under the authority of the Anti-Money Laundering and Combating the Financing of Terrorism Ordinance, HKMA is also the regulatory body responsible for combating money laundering and terrorist financing. In this capacity, it ensures that financial institutions in Hong Kong comply with various legal requirements, the most important of which is the development and implementation of an effective AML/CFT program. In order to comply with the HKMA’s anti-money laundering policy, this program must include:
- Risk assessment: Financial institutions must develop their AML program using a risk-based approach to the unique money laundering and terrorist financing threats they face.
- Procedures and Controls: AML/CFT programs must include a variety of procedures and controls, including independent audit schedules, employee training and selection, and compliance management.
Compliance Officers: Each financial institution must appoint a compliance officer with sufficient authority to assume responsibility for its AML/CFT program and for reporting suspicious activity.
Regulation of Crypto Trading Platforms in Hong Kong
The Hong Kong government is about to change the rules for crypto currency trading companies. The world’s financial regulators are formulating a better approach to regulating this industry. Indeed, Hong Kong which is home to many crypto exchanges is being a bit lax in this regard. Several Asian financial centers are now demanding uniform regulation of all crypto-trading platforms.
Hong Kong’s top financial watchdog announces the regulation of crypto-currency trading platforms. This decision is a departure from the previous “opt-in” approach. In a speech, Ashley Alder the chief executive of the SFC says that the current rules are not enough. According to Alder, the Hong Kong government is proposing a new licensing regime. As part of its anti-money laundering legislation it requires all crypto currency trading platforms to License SFC.