December 25, 2023
By Sharan Kaur Phillora
Hong Kong is set to usher in the New Year with a new set of regulations aimed at tightening the reins on cryptocurrency exchanges. Starting January 1, 2024, inter-exchange deposits and withdrawals will undergo stricter scrutiny, primarily impacting local crypto users.
Here’s what we know:
The so-called ‘Travel Rule’ is poised to make transactions more cumbersome for higher-value transactions, particularly affecting deposits to crypto exchange Hashkey from other exchanges. Deposits of HKD $8,000 ($1,000) or more will now only be credited if originating from Binance, while smaller transactions will be supported from 24 entities but will require users to provide additional Know Your Customer (KYC) information along with screenshots from other exchanges.
The rule aims to streamline and secure transactions but comes with a warning – mismatches in user information will lead to reversed transactions and fees charged to the user.
This move comes amidst Hong Kong’s growing position as a hub for Web3 firms, boasting 210 domiciled companies due to its regulation-friendly environment. The financial secretary of Hong Kong, Paul Chan Mopo, highlights the dual need to embrace technology’s potential while addressing the risks associated with the spillover impacts from offshore cryptocurrency exchange collapses and local fraud cases. Efforts like Cyberport’s Digital Transformation Support Pilot Programme illustrate Hong Kong’s commitment to fostering a robust digital economy.
Detailed provisions of the travel rule include a comprehensive scope of regulation, strict information requirements for all transactions, inclusion of self-hosted wallets, mandatory due diligence on counterparties, and stringent risk management and data retention policies. These measures aim to enhance transparency and security in the digital asset environment, marking a significant step in Hong Kong’s regulatory landscape.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
