FSTB and SFC conclude consultations on virtual asset dealer and custodian regimes, further consult on two new regimes
Executive Summary
The Financial Services and the Treasury Bureau (FSTB) and Securities and Futures Commission (SFC) have concluded consultations launched on 27 June 2025 on licensing regimes for virtual asset (VA) dealers and VA custodians, confirming legislative proposals to regulate these activities while further consulting on new regimes for VA advisers and asset managers. This advances Hong Kong's comprehensive VA regulatory roadmap, mandating SFC licensing for core VA dealing (e.g., VA-to-VA conversions, broker-dealer services) and custody (focusing on private key safekeeping), with strict requirements for asset segregation and use of licensed custodians to mitigate risks like insolvency, fraud, and cyberattacks. It matters for compliance professionals as it closes gaps in VA oversight, enforces Type 1/Type 13-equivalent standards, and signals accelerated implementation in 2026, potentially reshaping market structures for trading, custody, and related services. #
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 (regulated under existing regimes) and HK-licensed stablecoin issuers; dealers must use only SFC-licensed VA custodians (not overseas) for client assets and may need to partner with SFC-licensed VA trading platforms (VATPs) for liquidity, mirroring Type 1 (dealing in securities) financial resources rules. - 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 trustees/fund managers); requires responsible officers/managers-in-charge for core functions (private key
What You Need To Do
- Pre-Application Engagement
- License Applications
- Custody Segregation
- Compliance Mapping
- Monitor Further Consults
Compliance Impact
Urgency: High – Conclusions signal imminent 2026 legislation and licensing without transitional relief, requiring firms to build infrastructure (e.g., licensed custody partnerships, RO appointments) amid a two-tier market (trading segregated from custody) to avoid operating unlicensed post-implementation; non-compliance risks enforcement, as seen in prior VA circulars, while opportunities arise fo
Who is Affected
Summary
No description available.