Crypto & Digital Assets in Hong Kong

Key dates

19 February 2025

- SFC issues its ASPIRe roadmap, with “Access” identified as one of five pillars and VA regulatory expansion flagged as a strategic priority

27 June 2025

- Consultation papers published on legislative proposals to regulate VA dealing and VA custodian service providers, setting the broader perimeter for VA intermediaries

24 December 2025

- Consultation conclusions issued on legislative proposals to regulate VA dealing and VA custodian service providers, confirming direction for those regimes

24 December 2025

- FSTB and SFC launch further consultation on VA advisory and VA management regimes, which has now concluded

2026 (TBD – bill introduction)

- FSTB and SFC aim to introduce a bill into the Legislative Council to establish VA advisory and VA management regimes under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615)

Suggested considerations

• Conduct a gap analysis comparing current or planned virtual asset advisory and management activities against Type 4 and Type 9 requirements under the Securities and Futures Ordinance to identify where equivalent capabilities, controls and governance will be required under the new VA regimes.
• Map all group entities and business lines that provide VA-related advice, research, recommendations or portfolio management to clients in or from Hong Kong, and determine which entities will need licensing or authorisation under the forthcoming AMLO-based regimes.
• Initiate early engagement with the SFC (e.g. via pre-application meetings or WINGS enquiries) to clarify how existing licences, business models and cross-border arrangements will be treated under the new VA advisory and management regimes.
• Review and, where necessary, enhance AML/CTF frameworks, including customer due diligence, transaction monitoring, sanctions screening and ongoing review procedures, to ensure they are robust enough for VA-specific risks anticipated under AMLO-based regulation.
• Update internal policies and procedures on suitability, product due diligence, risk disclosure, conflicts of interest and best execution to explicitly cover VA advisory and VA management services in line with standards applied to traditional securities and funds.

What changed

• - The Hong Kong Government and SFC have confirmed that dedicated regulatory regimes for VA advisory services and VA management services will be created under the Anti-Money Laundering and...
• The regulatory scope and standards of the VA advisory regime will be aligned with Type 4 “advising on securities” regulated activity under the Securities and Futures Ordinance, applying a “same...
• The regulatory scope and standards of the VA management regime will be aligned with Type 9 “asset management” regulated activity under the Securities and Futures Ordinance, implying broadly...
• The consultation received broad market support across 51 responding stakeholders, and the SFC has treated this as a mandate to proceed to finalisation of the detailed legislative proposals and...
• The new VA advisory and management regimes will sit alongside existing and proposed VA regimes for: VA trading platforms, stablecoin issuers, VA dealing and VA custody, forming an end-to-end...

Key dates

1 November 2018

25 November 2022; Period of breaches where SCMHK distributed VA products to retail clients in violation of applicable SFC circulars

6 January 2026

Date of SFC announcement, reprimand, and HK$4 million fine imposition on SCMHK

Suggested considerations

• Conduct immediate VA product due diligence using SFC-specific procedures, not just group-wide protocols, to identify unauthorised VA funds and derivatives.
• Implement client knowledge assessments for VA investments before transactions, especially for retail clients.
• Provide VA-specific warnings and information on platforms and ensure retail access is blocked for PI-only products.
• Review and enhance online platform controls for suitability checks on complex products; audit historical VA trades for compliance gaps.
• Update internal policies to align with SFC circulars on VA distribution, including staff training on breaches like those at SCMHK.

What changed

This is an enforcement action, not a new rule change, but it reinforces existing SFC circulars requiring VA products (including unauthorised funds and exchange-traded VA derivatives) to be offered exclusively to professional investors (PIs). Key requirements reiterated include: conducting VA-specific product due diligence; assessing client knowledge of VA investments; providing sufficient VA-specific information and warnings; and implementing platform controls to restrict retail access to complex products.

Suggested considerations

• Pre-Application Engagement: Contact SFC immediately for discussions on VA custodian licensing, especially for existing VATPs/banks holding keys.
• License Applications: Prepare applications for VA dealer/custodian licenses once regimes commence; appoint responsible officers/managers-in-charge meeting fit-and-proper criteria, implement cold wallet infrastructure, private key controls, insurance, audits, and business continuity plans.
• Custody Segregation: Existing intermediaries/VA dealers must transition client VA custody to SFC-licensed VA custodians; cease use of non-compliant overseas providers.
• Compliance Mapping: Review operations against Type 1/Type 13 financial resources, core function authorizations, and exemptions; assess staking/MPC services for custody capture.
• Monitor Further Consults: Track incoming VA advisory/management regimes and adjust for no deeming provisions.

What changed

• - VA Dealer Regime: Introduces licensing for VA dealing activities (e.g., VA conversions, broker-dealer services at physical outlets or otherwise), excluding tokenized securities/derivatives...
• VA Custodian Regime: Targets entities safeguarding private keys or enabling unilateral VA transfers (e.g., capturing staking providers but exempting non-custodial wallets or delegating top-layer...
• Exemptions Under Consideration: Aligns partially with Type 1 exemptions, including principal/intra-group transactions, VA use as payment for goods/services, chaperone via SFC-regulated dealers, VA...
• Further Consultations: New regimes for VA advisory (aligned with Type 4) and asset management (aligned with Type 9), without deeming provisions for pre-existing entities; VA managers may face custody...