Hong Kong Advances Crypto Regulation with Upcoming OTC Framework Consultation

Regulating OTC Crypto Transactions

Hong Kong's government is gearing up to commence a public consultation aimed at regulating over-the-counter (OTC) cryptocurrency transactions. This move is poised to bring greater oversight to virtual-asset (VA) venues like shops and online platforms. According to the Financial Services and the Treasury Bureau (FSTB), the goal is to mitigate the risks of fraud that have been associated with some unlicensed VA trading platforms.

Striving for a Vibrant VA Ecosystem

In pursuit of establishing a thriving virtual-asset environment, the FSTB has been proactive in developing a regulatory landscape in recent years. A new licensing regime for crypto businesses was introduced last June, with a compliance deadline set for June this year. Companies aiming to continue their operations must secure the necessary approvals.

Stablecoin Oversight in the Works

The regulatory framework in Hong Kong also includes discussions on how to effectively regulate stablecoin issuers. Under the proposed rules, issuers would need to be licensed by the Hong Kong Monetary Authority, especially for fiat-backed stablecoins, ensuring a more secure environment for cryptocurrency transactions in the jurisdiction.