Hong Kong is set to make significant strides in establishing comprehensive regulations for virtual asset dealers and custodians. The Financial Services and the Treasury Bureau (FSTB) alongside the Securities and Futures Commission (SFC) recently concluded consultations on virtual regimes. These will inform a new legislative proposal slated for introduction to the city’s Legislative Council in 2026.
The proposals result from an extensive two-month public consultation that garnered over 190 responses, reflecting robust public engagement and interest. Central to these proposals is the creation of a licensing framework for handling virtual assets, with the rules set to be encapsulated under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. Importantly, these will mirror existing requirements for securities dealings, underlining a consistent regulatory approach.
Boosting Hong Kong’s Crypto Industry
Hong Kong's regulations aim not only to tighten security and compliance but also to bolster the city’s standing as an Asia-Pacific crypto hub, positioning it as a favorable alternative to neighboring Singapore. This proactive stance is notably distinct from China’s ongoing crackdown on virtual currencies, setting the stage for Hong Kong to emerge as a regional leader in the cryptocurrency space.
Earlier in the year, the SFC introduced new licensing regimes specifically intended for over-the-counter trading while simultaneously reassessing derivatives and margin trading practices concerning virtual assets. The clearing of staking services for licensed exchanges in April further exemplified a forward-thinking regulatory approach, yet these come with stringent asset control and risk disclosure mandates.
Proposed Custodian and Dealer Regulations
The proposed regulations for custodians focus on the secure management of private keys and the protection of client assets, a critical aspect of maintaining trust and integrity in virtual asset transactions. Concurrently, the dealer regulations aim to align with the licensing expectations set for securities intermediaries, forming a cohesive regulatory framework.
This initiative is part of the SFC’s broader ASPIRe roadmap—a strategy designed to improve access to regulated virtual asset markets and ensure safe trading practices while promoting innovation.
Extending Oversight
Additionally, the SFC has begun consultations aimed at extending regulatory oversight to include virtual asset advisers and managers. By adhering to the “same business, same risks, same rules” principle, the proposed regime would apply standards akin to those governing securities advisory and asset management services. Industry stakeholders have until January 23 to submit their comments on these new advisories.
This sweeping regulatory development showcases Hong Kong’s commitment to strengthening its financial landscape while also adapting to modern virtual asset dynamics. As we approach 2026, the city is poised to implement changes that could redefine its financial services industry, with the potential of significantly impacting global virtual asset markets.
