Hong Kong will establish a licensing system for cryptocurrency OTC trading, requiring compliance with the Anti-Money Laundering Ordinance.

BlockBeats News, February 14th. According to the Hong Kong Wen Wei Po report, Hong Kong currently has 9 licensed cryptocurrency exchanges mainly serving institutional investors, while retail trading relies on unregulated online platforms and over-the-counter (OTC) transactions. The Hong Kong OTC market is reported to be extensive, including around 100 exchanges, hundreds of cryptocurrency ATMs, over 200 OTC exchange stores, and 250 active online trading service providers. Most of these trading activities are not within the regulatory framework, leading to various risks.

Hong Kong Legislative Councilor Wu Chi-wai stated that Hong Kong's cryptocurrency regulation will see a new mechanism this year. To prevent money laundering and fraud risks, protect investor interests, align with international AML standards, ensure market security and standard operations, the SAR government will establish a licensing system for cryptocurrency over-the-counter (OTC) trading. OTC entities will be required to comply with AML and KYC regulations under the Anti-Money Laundering Ordinance. Licensed entities can only engage in spot trading between virtual assets and fiat currency, and must register and monitor business wallets and transaction records. The Secretary for Security, as the regulator, will be responsible for licensing approval, routine inspections, investigating violations, and imposing penalties, with violators facing fines of up to HK$1 million or two years' imprisonment. Regarding KYC authentication, the SAR government recommends verifying customer identities, assessing and documenting the nature and purpose of transactions, and continuously monitoring transaction activities.