Hong Kong International New Economy Research Institute: The virtual asset market will undergo a reshuffle, and some non-compliant U businesses and project parties may exit

ChainCatcher news, Executive Director Fu Rao of the Hong Kong International New Economy Research Institute wrote in the Ta Kung Pao article "Improving the Regulation of Virtual Assets for Healthy Industry Development," pointing out that the Supreme People's Court and the Supreme People's Procuratorate of China jointly issued an interpretation regarding several issues related to the application of laws in handling money laundering criminal cases, which explicitly lists virtual asset transactions as one of the methods of money laundering. This will have the following impacts on the virtual asset industry:

• Increased compliance costs for the industry. The introduction of regulations means that practitioners need to pay more attention to compliance issues and increase compliance investments to ensure that their businesses are legal and compliant. The market will undergo reshuffling, and some non-compliant U businesses and project parties may exit the market, further increasing industry concentration.
• Enhanced investor education. The introduction of regulations will prompt investors to pay more attention to the risks associated with virtual assets, improving their ability to identify risks.
• Gradual improvement of industry regulation. The release of this judicial interpretation will help regulatory authorities to conduct more effective oversight of the virtual asset industry, promoting healthy industry development.

As Hong Kong vigorously develops its virtual asset economy, the mainland has responded by addressing serious crimes most easily triggered by virtual assets. In this context, both U businesses and ordinary investors should enhance their legal awareness, ensure compliance in transactions, and avoid falling into legal risks.