Hong Kong announced today that it will regulate all cryptocurrency exchanges operating in the country.
According to a report published on Reuters, the new proposal would require all exchanges within the country’s Security and Futures Commission (SFC) regulatory purview to obtain a license under its anti-money laundering legislation.
The move is coming after several cryptocurrency exchanges operating in the country decided not to acquire a license from the existing regime because the SFC has never issued a full license to exchanges.
However, despite exchanges not being comfortable with the SFC license issuance, a few crypto firms have applied with the commission.
OSL Digital Securities, a unit of the Fidelity-backed BC Group, is among the few exchanges that have applied for the SFC license since they wish to service the mainstream financial market.
Commenting on the development, Ashley Alder, chief executive of the SFC, said that crypto-related firms that choose to operate out of its regulatory purview could only do so only if their asset offerings are not classed as securities.
Last year, the SFC introduced an opt-in regulatory framework for trading platforms that offer assets classified as either security or futures by the commission and not cryptocurrencies like bitcoin (BTC) Ether (ETH), among others.
The regulators sought to address concerns over custody, know-your-customer (KYC) requirement, anti-money laundering (AML), counter-financing of terrorism (CFT), and crypto trading.
Alder stated that the new proposed regulatory framework is different from the existing rules and requires all crypto trading platforms to apply for an SFC license.
Since cryptocurrencies are gaining widespread adoption, the issue of regulating cryptocurrency trading to mitigate its use in fraudulent activities has been a topic of discussion globally.
Several countries are still assessing the pros and cons of cryptos in order to regulate the crypto space in their jurisdictions, while some others have established regulatory frameworks for the industry.
Meanwhile, earlier this year, Estonia withdrew its regulatory license from over 500 cryptocurrency exchanges to curb financial fraud in the country.
