Hong Kong's cryptocurrency regulation will introduce a new mechanism this year: registration to monitor business wallets and transaction records, and offenders may be imprisoned for two years

According to the Hong Kong media report, Hong Kong regulates cryptocurrency exchanges, but there are only nine licensed exchanges, and they mainly serve professional investors. Wu Kit-chuang, a member of the Legislative Council of the Hong Kong Special Administrative Region, said that Hong Kong's cryptocurrency supervision will usher in a new mechanism this year. The SAR government will establish a licensing system for cryptocurrencies over the counter (OTC), and require OTC to comply with the Anti-Money Laundering (AML) and Customer Due Diligence (KYC) provisions of the Anti-Money Laundering Ordinance. In addition, licensees can only conduct spot transactions between virtual assets and fiat currencies, and need to register and monitor business wallets and transaction records. As a regulator, the Commissioner of Customs and Excise is responsible for approving licences, conducting routine inspections, investigating and imposing penalties for non-compliance, with a maximum fine of HK $1 million or imprisonment for two years. For KYC certification, the SAR government recommends verifying the identity of customers, assessing and recording the purpose and nature of customers' transactions, and continuously monitoring transaction activities.