FSTB and SFC conclude consultations on virtual asset advisory and management regimes

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 Counter-Terrorist Financing Ordinance (Cap. 615), rather than
• 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 business, same risks, same rules” approach to VA advice.
• 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 comparable licensing, conduct, risk management and governanc
• 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 subsidiary regulatory requirements.
• 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 regulatory architecture across the VA lifecycle.
• The regimes are explicitly positioned as part of the SFC’s ASPIRe roadmap, particularly the “Access” pillar, indicating that regulated access to VAs is being formally integrated into Hong Kong’s digital asset strategy and licensing roadmap.

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.
• Assess and upgrade governance arrangements, including Board oversight, senior management accountability and Management Responsible Officers, to ensure clear allocation of responsibility for VA advisory and VA management activities.

Key Dates

Who is Affected