Hong Kong’s financial regulators plan to crack down on over-the-counter (OTC) crypto trading activity in the city-state, according to a Bloomberg report.
The report says that Hong Kong’s Financial Services and the Treasury Bureau earlier this month kicked off consultations focused on fighting fraudulent activity, terrorism financing and money laundering in the OTC crypto conversion business.
Bloomberg reports that Hong Kong plans to institute regulations that will require physical over-the-counter crypto exchanges to collect and keep customer records as well as hire compliance staff.
The Hong Kong government suspects some crypto firms of aiding criminal activities such as crypto investment fraud or assisting Chinese nationals skirt capital controls, according to the Bloomberg report.
Hong Kong is concurrently aiming to tightly regulate online crypto exchanges with a deadline to obtain or apply for a license to operate already in place.
The Bloomberg report quotes the head of the Asia Pacific (APAC) region for blockchain analysis firm Chainalysis, Chengyi Ong, as saying that the plans to crack down on Hong Kong’s crypto conversion shops will trigger “consolidation and a reduction in the use of these platforms as on-ramps into crypto”.
Roger Li, the co-founder of a chain of crypto conversion stores called One Satoshi, tells Bloomberg that collecting and keeping customer records and hiring compliance staff will raise operating costs.
The report quotes Lie as saying that Hong Kong’s OTC crypto stores will “either have to stop the crypto business or apply for the new license”.
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