Hong Kong Rules Out Bitcoin Regulation
by Mary Swire, Lowtax.net, Hong Kong
26 March, 2015
As virtual currencies, such as Bitcoin, are not widely circulated in Hong Kong, the Government has said there is currently no need to introduce legislation to regulate virtual commodities trading.
Responding to lawmakers' questions in the Legislative Council, Secretary for Financial Services and the Treasury, KC Chan, noted that Bitcoin has not yet been accepted widely as a medium of payment in Hong Kong, and its circulation as a medium of exchange in daily life or business transactions is limited. As only a small number of vendors claim to accept Bitcoin, it does not qualify as an e-currency.
Chan added that, "like most jurisdictions, Hong Kong does not have any targeted regulatory measures on virtual commodities specifically in terms of their safety or soundness, and the trading platforms or operators of such commodities. That said, our existing laws provide for sanctions against unlawful acts, such as money laundering, terrorist financing, fraud, pyramid schemes, and cyber-crimes, whether or not these virtual commodities are involved."
Chan also confirmed that Hong Kong's financial regulators have required financial institutions to stringently assess money laundering and terrorist financing risks associated with virtual commodities. "Such institutions are required to comply continuously with customer due diligence and record-keeping requirements when establishing or maintaining business relationships with customers or clients who are operators of any schemes or businesses relating to virtual commodities," he said.
As it is also seen as unlikely that Bitcoin will pose a significant threat to Hong Kong's financial system, the Government does not consider it necessary at the moment "to introduce new legislation to regulate trading in such virtual commodities or prohibit people from participating in such activities."
Chan concluded that "the Government and financial regulators will keep a close watch on the development of Bitcoin and other virtual commodities, and maintain contacts with their counterparts in other places through active participation in meetings of the relevant international organizations (such as the Financial Action Task Force)."
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