Hong Kong Says Bitcoin Poses ‘Medium-Low’ Risk in Financial Crime

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The Hong Kong Financial Services and Treasury (FSTB) released a report on the status of money laundering and terrorism financing. The report concluded that virtual currencies, like Bitcoin (BTC), are not particularly involved in either type of financial crime.
The FSTB notes that “although there is inherent money laundering/terrorism financing vulnerability related to virtual currencies”: “There does not seem to be any visible impact affecting the overall risk in Hong Kong so far. The risk of virtual currencies is assessed as medium-low.”
The report mentions the use of cryptocurrencies in Ponzi schemes and cybercrimes citing 167 Bitcoin related police reports from 2013-2017. The Money Laundering and Terrorist Financing Risk Assessment Report also mentions that the FSTB, Hong Kong financial regulators and law enforcement agencies are working together to look into risks related with Initial Coin Offerings and digital currencies in general:

“While we have not found substantial risks in these newly developing payment methods or commodities, this is a rapidly developing area requiring continued monitoring.”

Cryptocurrencies are not considered legal tender in Hong Kong, says the report. The FTSB suggests that because Hong Kong “is one of the world’s freest economies with a vibrant foreign currency exchange market and no capital controls […] virtual currencies are therefore not as attractive as in economies where people may try to circumvent currency controls or seek refuge from a high inflation rate”: “The exchange of Bitcoin in person is not popular […] Domestically, the use of Bitcoin remains at a negligible level.”
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