Hong Kong’s OTC Licensing System Only Accepts Bitcoin and Ethereum For Investment

Key Points:

• The conclusion of Hong Kong’s OTC licensing system draws mixed reactions, especially regarding currency restrictions.
• Concerns were raised over proposed limitations on stablecoins that impact OTC businesses.
• Stakeholders advocate for balanced regulations considering market dynamics and financial burdens on smaller players.

According to the Hong Kong Economic Journal, the public consultation on the licensing system for virtual asset over-the-counter (OTC) trading service providers concluded last Friday, garnering mixed responses from industry players.

Hong Kong’s OTC Licensing System With Mixed Reactions Emerge

Hong Kong’s OTC licensing system, requiring virtual assets to be traded only on platforms licensed by the Securities and Futures Commission, has sparked concerns among businesses. With the narrowing of tradable assets to Bitcoin and Ethereum, industry experts fear a significant impact on OTC operations, particularly in light of stablecoin transactions’ restrictions.

Customs authorities have confirmed the completion of relevant consultations and affirmed intentions to consider received opinions and suggestions before submitting the bill to the Legislative Council. However, the proposed restrictions, especially regarding stablecoins like USDT and USDC, have drawn criticism from industry insiders.

Stakeholders Urge Balanced Regulations Amidst Financial Burdens

The consultation document outlines intense customer due diligence measures and mandates the appointment of compliance and anti-money laundering officers, posing significant financial burdens for smaller OTCs. Industry representatives stressed the need for a nuanced approach, considering the diverse market landscape and customer preferences.

Amidst ongoing discussions, stakeholders urge authorities to prioritize understanding the unique dynamics of Hong Kong’s OTC licensing system and tailor regulations accordingly. As previously reported by Coincu, Hong Kong is set to announce trading approvals for Bitcoin ETFs and Ethereum ETFs today.