HKIEF Hong Kong Innovative Encryption Fund: Hong Kong to Establish VASP Licensing System and Implement Dual License Regulation

The HKIEF Hong Kong Innovative Encryption Fund has announced that Hong Kong will establish a VASP (Virtual Asset Service Provider) licensing system and implement dual license regulation.

According to the existing regulations under the Securities and Futures Ordinance, securities tokens trading on virtual asset trading platforms are regulated. License No. 1 and No. 7 are required. Stablecoins such as USDT and USDC are classified as securities.

For non-securities tokens trading platforms, they are regulated under the VASP (Virtual Asset Service Provider) system under the Anti-Money Laundering Ordinance. A VASP license and a trust license are required. BTC, ETH, and OTC business are classified as non-securities.

It is expected that the VASP licensing system will take effect on June 1, 2023, and Hong Kong will need to fully license all virtual asset service providers by no later than May 31, 2024.

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