On June 1, Hong Kong's "Guidelines for Operators of Virtual Asset Trading Platforms" and "Guidelines for Combating Money Laundering" were officially implemented, and Hong Kong's virtual asset licensing system came into effect. As a Web3 technology company that has been deeply involved in the Hong Kong market for many years, OKLink also officially launched the Onchain AML anti-money laundering compliance solution, which uses the massive on-chain data accumulated over the years to realize the comprehensive traceability and monitoring of virtual asset transactions . Onchain AML will become a key factor for financial institutions and service providers to enter the field of virtual asset compliance. It is also providing multiple anti-money laundering solutions for different customers such as regulatory agencies, law enforcement agencies, and virtual asset exchanges , helping digital asset compliance and risk prevention. Control, improve industry norms and transparency, and promote the healthy and safe development of the entire industry.
"Sing Tao Daily" , one of the Chinese newspapers with the longest history in Hong Kong and one of the largest distribution networks in the world, interviewed Ren Yunan, executive director, chairman of the board of directors and chief executive officer of Okey Cloud Chain Holdings ( 01499.HK ), about the Hong Kong virtual In-depth discussions on topics such as new regulations on assets and anti-money laundering of virtual assets. Sing Tao, a large-scale comprehensive news and information portal website based on the perspective of Chinese people and serving Chinese people all over the world, launched this interview simultaneously.
The following are the details of the interview:
Sing Tao Daily: Since June 1, Hong Kong’s virtual asset licensing system has officially come into effect. All platforms that intend to engage in virtual asset business in Hong Kong can apply for an SFC license and be regulated by it. At present, platforms including OKX, BitgetX, BitMEX, and Gate.HK have launched Hong Kong stations, and many institutions are actively applying for virtual asset trading licenses. How do you view this matter? What impact will Hong Kong's virtual asset transaction compliance have on Hong Kong and the global Web3 industry?
Ren Yunan: The entry into force of the new regulations on virtual asset supervision on June 1 indicates that Hong Kong has taken the lead in the regulation of virtual assets and Web3, and will provide clear and clear regulatory guidance for the virtual asset industry. Since 2017, Hong Kong has paid close attention to the development of the global virtual asset field, and gradually expanded the scope of virtual asset supervision and explored appropriate regulatory rules. By June 1, 2023, the new regulatory regulations will come into effect. We believe that Hong Kong has established a relatively comprehensive and A balanced regulatory framework. This is of great significance to Hong Kong and the global Web3 industry.
In the first few years of virtual assets, regulatory compliance may only be a plus point to increase the competitive advantage, but after a series of risk events in the past, coupled with the increasing impact of virtual assets on traditional financial markets, including investors and Regulators hope that the virtual asset market can be more standardized and transparent, and meeting compliance and security requirements has become a must for the virtual asset market. The entry into force of the new regulations is not only beneficial to the development of Hong Kong, but also provides a reference for other countries to explore the regulation of virtual assets.
In Hong Kong's new regulatory regulations, the core is the licensing system for virtual asset trading platforms. Hong Kong’s strategy of regulating the virtual asset market based on licenses is wise and safe. Mandatory licensing of trading platforms can protect investors to a large extent, and can also stimulate the development of other innovative formats from the trading link. But the license cannot completely solve the problem of trust and risk in the Web3 market. In the modern financial system, licensed operation has long been a mandatory condition for financial development, but have the risks and crises in the traditional financial market disappeared? Obviously not. Therefore, the licensing system is only the basis and starting point for the compliance and security of virtual assets in Hong Kong, and technical regulation is the top priority for regulating the Web3 market in the future. We need more technical means and compliance solutions to discover risks and solve problems on the basis of license regulation.
As one of the Web3 technology companies deeply rooted in Hong Kong, Okey Cloud Chain Holdings actively participates in the consulting work of virtual asset supervision, and proposes corresponding technical solutions to the Hong Kong Securities Regulatory Commission in terms of virtual asset transaction security and risk management, including decentralized storage of seed encryption. keys, multiple confirmations, and building your own on-chain firewall (such as situational awareness), etc. These suggestions are reflected in the final released regulatory framework, which is actually a recognition of Okey Cloud Chain's technical capabilities and compliance solutions, and also reflects the Hong Kong Securities Regulatory Commission's open regulatory attitude and transparent regulatory thinking.
Sing Tao Daily: Previously, Hong Kong Monetary Authority President Yu Weiwen mentioned that Hong Kong will strive to strike a balance between maintaining Hong Kong's safe and efficient financial system and supporting financial innovation when developing virtual assets. What do you think of the current regulatory thinking on virtual assets in Hong Kong? Which details deserve our attention?
Ren Yunan: The core of Hong Kong's current regulation of virtual assets is to balance regulatory compliance requirements and industry development needs, taking into account technological innovation and financial stability. This is consistent with the strategy of "proper supervision" and "promotion of development" proposed by Hong Kong's Financial Secretary Mr. Paul Chan. The key to the realization of this strategy is that the regulatory authorities can timely and accurately grasp the status quo and development laws of the virtual asset market, thereby eliminating the information gap and time gap between regulation and innovation. However, history has long shown that there is always a lag in regulation, and the degree of lag in regulation often determines the degree of risk accumulated in innovation. The relatively static regulatory framework in the past often could only respond to market crises passively, and this "passivity" would make the compliance of enterprises more complicated and expensive, which is obviously not in line with the rapidly changing virtual asset and Web3 markets.
The key to solving these problems lies in technology. Although technological innovation will lead to many risks, it can also become an important means of resisting risks and meeting compliance. Since the international financial crisis in 2008, financial regulations around the world have become stricter. Faced with rising compliance costs, major countries represented by the United States, the United Kingdom, Singapore, and China are exploring the use of emerging technologies to reduce regulatory compliance costs. , Improving the efficiency of financial supervision. In the virtual asset and Web3 markets, technologies such as blockchain and big data can not only become a fuel for the development of digital finance, but also have the potential to become a "firewall" to prevent risks and protect security. The Hong Kong Securities Regulatory Commission is obviously aware of this, so in the regulatory framework, it has repeatedly emphasized the need to prevent risks rather than guarantee security, and recommends that financial institutions should adopt appropriate technological solutions such as blockchain analysis tools to be able to track virtual assets and related wallets Address and identify potentially suspicious transactions.
Sing Tao Daily: With the continuous expansion of the global virtual asset business scale, the use of virtual assets for money laundering is gradually increasing. FATF issued virtual asset anti-money laundering warnings to various countries/regions and provided corresponding anti-money laundering regulatory recommendations. Hong Kong's latest revised "Guidelines for Combating Money Laundering and Terrorist Financing" also specifically regulates the anti-money laundering compliance issues of virtual assets in detail. Why is money laundering of virtual assets so rampant? Can traditional anti-money laundering methods solve the problem of virtual asset anti-money laundering? If not, how should enterprises and regulators deal with the fraud/money laundering risks that virtual assets may bring?
Ren Yunan: Virtual assets, supported by blockchain technology, have gradually become a new money laundering channel due to their natural anonymity, cross-border and transaction convenience, and often use mixed currency platforms, privacy coins, etc. to enhance anonymous services or mechanisms The concealment of transactions makes it very difficult to trace the source. According to the "Global Virtual Currency Crime Situation and Security Governance White Paper" jointly issued by the Key Laboratory of Network Information Security of the Third Research Institute of the Ministry of Public Security and the Okey Cloud Chain Research Institute, the current virtual asset money laundering crime has shown cross-regional, cross-industry, and specialization , gangs and other trends, ordinary investors are likely to be involved in virtual asset money laundering activities without knowing it. How to identify money laundering risks faster and more accurately so as to combat related illegal and criminal activities has become a difficult problem for the supervision and industry.
In the traditional financial market, anti-money laundering mainly relies on data submitted by financial institutions, and through technical means such as KYC and KYB to identify and prevent money laundering risks. This method is also currently being used to combat virtual asset money laundering crimes. However, due to the anonymity and concealment of virtual assets, and some trading platforms do not strictly implement KYC, even if the transaction data is reported, it is difficult to contact the real identity. Therefore, traditional anti-money laundering methods such as KYC/KYB cannot fully satisfy virtual assets. Compliance requirements with the Web3 market. In order to solve these pain points, OKLink, a subsidiary of OKLink Holdings (01499.HK), provides the latest Onchain AML anti-money laundering compliance solution, which uses the massive on-chain data accumulated over the years to realize the comprehensive traceability and monitoring of virtual asset transactions. Taking the KYT (Know Your Transaction) service in Onchain AML as an example, it associates addresses with the real world, monitors the risk of deposit and withdrawal transactions, identifies malicious addresses and generates alarms, and meets the compliance and compliance requirements of virtual asset service providers (VASPs). Risk control needs; and regulators can also use the KYA (Know Your Address) service in Onchain AML to identify, analyze, measure and classify the risk types of addresses on the chain, and assist in the investigation of virtual assets and initially screen on-chain Transaction risk, thereby improving the transparency of virtual asset transactions.
Sing Tao Daily: In the face of frequent favorable policies in Hong Kong, many technology companies at home and abroad are now focusing on Hong Kong. As one of the Web3 technology companies in Hong Kong, what advantages do you think Hong Kong has in developing Web3 and virtual assets? Which sub-tracks can gain long-term attention and development in Hong Kong?
Ren Yunan: Hong Kong has made a lot of efforts in the development of virtual assets and Web3, promoting the development of Web3 from multiple dimensions such as talents, enterprises, and investment. The entry into force of the new regulatory regulations will further consolidate Hong Kong's advantages in the global virtual assets and Web3 competition, so that it truly has the industrial foundation to become a global Web3 center.
Regarding the selection of subdivision tracks, we first need to understand Hong Kong's real demands for the development of virtual assets and Web3. The development of Web3 and virtual assets in Hong Kong is definitely not for speculation, but to hope that these technological innovations and application innovations will have a substantial impact on the economy and society. The success of the application depends on whether the new technology, model and application can truly meet the needs of the real economy, create value for citizens, and even benefit the whole society. Therefore, the segmented track represented by RWA that can promote the common development of Web3 and the real economy will definitely usher in development opportunities.
On the other hand, the core of Hong Kong's Web3 model's long-term development is compliance and security, so there will be broad space for segmented tracks that can meet the security and compliance requirements of virtual assets. With the opening of Hong Kong's virtual asset market, trading platforms will face stricter regulatory compliance requirements, and anti-money laundering capabilities will become the focus of qualification review. The "Guidelines for Combating Money Laundering and Terrorist Financing (Revised)", which came into effect at the same time as the licensing system, also specifically regulates the anti-money laundering compliance issues of virtual assets in detail. It is foreseeable that compliance services focusing on anti-money laundering services will become the common needs of the Hong Kong government and enterprises. Among them, the Hong Kong Securities Regulatory Commission and the Hong Kong Monetary Authority will need to use technical means to establish a virtual asset transaction traceability and scene tracking system in the future, and strengthen the monitoring and analysis of virtual asset transactions to ensure Hong Kong's financial stability. From the perspective of the industry, all enterprises and institutions that wish to conduct virtual asset business in Hong Kong also need available compliance tools to meet regulatory requirements and ensure the smooth development of their business in Hong Kong.
The Onchain AML recently launched by Okey Cloud Chain is aimed at this track. With the help of the massive data resources and technical service experience accumulated by OKLink for many years, we have the ability and are providing multiple anti-money laundering solutions for different customers such as regulatory agencies, law enforcement agencies, virtual asset exchanges, and financial institutions. In the future, we will continue to strengthen the R&D and promotion of on-chain anti-money laundering technology, provide customers with more comprehensive and efficient on-chain anti-money laundering solutions, and promote the healthy and safe development of the entire industry.
Sing Tao Daily: From a global perspective, what is the overall development and regulatory situation of the current Web3 and virtual asset market? Which countries are likely to be competitors to Hong Kong as a global Web3.0 hub? How should Hong Kong respond to these challenges?
Ren Yunan: Web3 is not only a technological revolution that brings together many cutting-edge innovations, but also a financial revolution with data as the core and virtual assets as the object. It has the potential to optimize or even subvert current financial products and services. Although from the perspective of funds and users, the virtual asset and Web3 market is still in the stock game stage. At the same time, due to some risk spillovers, global regulation is also tightening overall, but the virtual asset and Web3 market is still the most active in global innovation and is also the focus of attention. highest degree field. Many countries and regions, including Hong Kong, hope to develop Web3 in an orderly manner under the premise of protecting investors and maintaining financial order and stability. Among them, Singapore, Japan, and Dubai are actively encouraging the innovative development of virtual assets and Web3, striving to establish a complete and effective regulatory framework. Europe, which has just passed the MiCA Act, also has great development potential. These leading countries and regions in Web3 have some very important common characteristics, that is, they are willing to embrace the changes of Web3 and continuously iterate regulatory technologies and methods, rather than forcibly incorporating virtual assets and Web3 into the existing financial regulatory system. This is very important to the sustainable development of virtual assets and the Web3 industry.
Facing the challenges of these countries and regions, Hong Kong must first maintain policy continuity so that more excellent Web3 companies and talents can develop stably in Hong Kong; secondly, it must give Web3 technology sufficient regulatory flexibility and continue to adopt an open and inclusive policy. Attitude to welcome all kinds of innovations; more importantly, to have enough patience - the prosperity of virtual assets and Web3 ecology is not a temporary success, it needs enough time to gather development elements such as talents, capital, technology and applications. We believe that Hong Kong will regain its glory as an international financial center and become the source of global Web3 innovation, relying on its own traditional financial foundation and perfect legal system, as well as the solid resources of the mainland with its front shop and back factory backed by the mainland.
The entry into force of the new regulations on virtual assets marks that Hong Kong is once again at the forefront of the world in the innovation and compliance development of virtual assets and Web3 . The in-depth interview with Chairman and Chief Executive Officer Ren Yunan has also been reprinted and reported by many national authoritative media such as China Economic Net, China Net Technology, Cailian Press, and CICC Online.
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Hong Kong's continuous opening up of Web3 also marks that compliance will become the main theme of the industry's development in the next stage. OKLink will bring a new Onchina AML anti-money laundering compliance solution to help Hong Kong and even the world's virtual asset compliance and compliance. safe development.