According to a report from Bloomberg, Hong Kong’s financial regulators plan to crack down on over-the-counter (OTC) crypto trading in the city-state.
The report says that earlier this month, Hong Kong’s Financial Services and the Treasury Bureau kicked off consultations aimed at combating fraudulent activities, terrorist financing and money laundering in the OTC crypto conversion sector.
Bloomberg reports that Hong Kong plans to institute regulations that will require physical over-the-counter crypto exchanges to collect and store customer data, and to hire compliance staff.
According to the Bloomberg report, the Hong Kong government suspects some crypto companies of aiding criminal activities, such as crypto investment fraud or helping Chinese nationals evade capital controls.
Hong Kong simultaneously aims to tightly regulate online crypto exchanges, with a deadline for obtaining or applying for a pre-existing license to operate.
The Bloomberg report quotes blockchain analytics firm Chainalysis’s Asia Pacific (APAC) head, Chengyi Ong, as saying that plans to crack down on Hong Kong’s crypto conversion shops will lead to “consolidation and a reduction in use of these platforms. as an on-ramp to crypto.”
Roger Li, co-founder of a chain of crypto conversion shops called One Satoshi, tells Bloomberg that collecting and maintaining customer data and hiring compliance staff will increase operating costs.
The report quotes Lie as saying that Hong Kong’s OTC crypto shops “will have to either cease crypto operations or apply for the new license.”
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