Hong Kong developing new crypto tracing tool, here’s what you need to know

Hong Kong has confirmed that it is developing a cryptocurrency tracking tool to strengthen enforcement against cross-border money laundering. During a media briefing, Assistant Commissioner Mario Wong Ho-yin of Hong Kong Customs said the department is working with the University of Hong Kong to build the tool to counteract increasingly complex financial crimes involving virtual assets. While details of the tool’s operation remain confidential, officials said it is being designed to trace suspicious crypto transactions linked to money laundering schemes . According to Wong, the university has already supported the department with forensic technologies in other cases, including those involving illegal streaming, and that technical assistance is essential for meeting court evidence requirements. “These money laundering threats are characterised by a transnational and borderless nature, and no single agency can tackle this problem alone,” he added. Crypto’s role in money laundering Seven out of nearly 40 major laundering cases probed by Hong Kong Customs since 2021 have involved the use of cryptocurrencies. These seven cases accounted for more than HK$9 billion (US$1.1 billion) in suspected criminal proceeds, often disguised as routine trading activity. In one particular instance, officials uncovered over 1,000 suspicious transactions totalling HK$1.8 billion across five companies and 18 local bank accounts. Three suspects were arrested, with two accused of moving HK$760 million via a cryptocurrency platform. Plans for a digital crypto tracing tool were first revealed earlier this year when Hong Kong’s Cyber Security and Technology Crime Bureau introduced CryptoTrace, a system jointly developed with the University of Hong Kong. It was described as a platform providing “advanced intelligence and investigative support” for officers handling virtual asset cases. Announced during the Blockchain Security Summit in March, CryptoTrace is already in use by frontline police investigators and is designed to support intelligence gathering in virtual asset-related crimes. At the time, the bureau said CryptoTrace employed blockchain analytics, graphing, and visualization technologies to trace laundered funds and identify suspect activity. Reportedly, training sessions had already been held to equip frontline officers with the skills to use the system effectively. While the Customs Department did not confirm the name of the tool currently under development, its partnership with the same university and its stated objectives have raised speculation that the system may be an extension, or internal application, of the earlier CryptoTrace platform. Hong Kong takes a cautious approach Hong Kong’s approach to digital assets remains deliberately measured , as it plans to balance innovation and regulatory oversight. Nevertheless, locals appear undeterred by regulatory caution , with a November 2024 survey revealing that one in four adults plan to invest in cryptocurrencies. However, the findings also indicated a clear preference for regulated exchanges, with respondents expressing greater trust in licensed platforms compared to unregulated ones. This growing appetite among residents appears to be shaping how Hong Kong regulators calibrate policy. In April, the Securities and Futures Commission began allowing licensed virtual asset trading platforms to offer staking services, but only under strict conditions. Platforms must obtain written approval and comply with measures designed to protect users and disclose the risks associated with locking up assets for yield generation. By May, lawmakers had passed the Stablecoins Bill , mandating that all issuers of fiat-referenced stablecoins tied to the Hong Kong dollar obtain a license from the Hong Kong Monetary Authority. Last week, the government confirmed that the Stablecoin Ordinance will take effect on August 1, 2025. The law will also limit stablecoin-related advertisements to licensed issuers and grant certain exemptions for offerings made exclusively to qualified investors. The post Hong Kong developing new crypto tracing tool, here’s what you need to know appeared first on Invezz

Source: Invezz