Hong Kong is set to finalize proposals aimed at regulating virtual asset dealers and custodians, with plans to present these rules to the city’s Legislative Council in 2026, as stated by the Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) on Wednesday.
These proposals were developed following a two-month public consultation that garnered over 190 responses, and they aim to establish a licensing framework for virtual asset dealing and custodial services. The regulations will fall under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and reflect existing requirements for securities trading.
The Hong Kong government is working to create a regulatory landscape that fosters the growth of the city’s cryptocurrency industry, with the goal of establishing it as Asia’s preferred crypto hub over Singapore. This approach diverges from China’s, which is tightening its restrictions on virtual currencies.
In February, the SFC introduced new licensing regimes for over-the-counter trading, while also reviewing derivatives and margin trading for virtual assets. In April, it approved staking services for licensed exchanges and funds, subject to stringent asset control and risk disclosure rules. Spot crypto exchange-traded funds have been operational since 2024.
The proposed custodian framework emphasizes the security of private keys and safeguarding client assets, while the dealer regulations align with licensing standards for securities intermediaries. Both initiatives are aspects of the SFC’s broader ASPIRe roadmap aimed at enhancing access to regulated virtual asset markets.
The SFC has also initiated a consultation to expand oversight to virtual asset advisers and managers. This framework will adhere to the “same business, same risks, same rules” principle, applying standards similar to those found in securities advisory and asset management services, according to the regulators. Feedback is required by January 23.
