The Hong Kong government has introduced a licensing regime for Virtual Assets Service Providers (VASPs) to regulate the provision of virtual asset services. This licensing regime aims to promote the sound development of the virtual asset industry in Hong Kong by enhancing investor protection, combating money laundering, and promoting market integrity.
Here is a practical guide to the VASP licensing regime in Hong Kong:
Who needs to apply for a VASP license?
Any person who carries on a business in Hong Kong as a VASP needs to apply for a license. A VASP is defined as a person who provides any of the following services:
– Virtual asset trading platform services
– Virtual asset portfolio management services
– Virtual asset custodian services
What are the requirements for a VASP license? To obtain a VASP license, an applicant must meet the following requirements:
– Fit and proper:
The applicant must be a fit and proper person. This means that the applicant and its key personnel must have a good reputation, financial soundness, and relevant experience and competence.
– Adequate resources:
The applicant must have adequate financial, technological, and human resources to operate the VASP business.
– Compliance with regulatory requirements:
The applicant must comply with all applicable regulatory requirements, including anti-money laundering and counter-terrorist financing requirements.
– Risk management:
The applicant must have effective risk management systems and controls in place to manage the risks associated with virtual asset services.
How to apply for a VASP license?
To apply for a VASP license, the applicant needs to submit an application to the Hong Kong Securities and Futures Commission (SFC). The application should include:
– Completed application form
– Business plan
– Financial statements
– Compliance policies and procedures
– Risk management systems and controls
– Fit and proper declarations for key personnel
– Any other information or documents required by the SFC
How long does it take to obtain a VASP license?
The processing time for a VASP license application depends on the complexity of the application and the completeness of the information provided. The SFC aims to process VASP license applications within six months.
What are the ongoing requirements for a VASP license?
Once a VASP license is granted, the licensee must comply with ongoing regulatory requirements, such as:
– Submitting regular reports to the SFC
– Conducting regular internal audits
– Maintaining adequate systems and controls to manage risks
– Complying with anti-money laundering and counter-terrorist financing requirements
– Adhering to conduct requirements, such as fair treatment of customers and avoidance of conflicts of interest
In summary, the VASP licensing regime in Hong Kong aims to promote the sound development of the virtual asset industry while enhancing investor protection, combating money laundering, and promoting market integrity. Any person who carries on a business as a VASP in Hong Kong should carefully consider the licensing requirements and comply with ongoing regulatory requirements to maintain their license.