Hong Kong has taken a major step toward strengthening oversight of the digital asset industry as the Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) published consultation conclusions on new licensing regimes for virtual asset (VA) dealing and custodian service providers.
The proposals, which received broad market support during consultation, aim to complete Hong Kong’s regulatory framework for digital assets under the SFC’s ASPIRe roadmap.
Authorities confirmed they will proceed with legislation to regulate VA dealers and custodians, while simultaneously launching a fresh consultation to expand oversight to VA advisory and management service providers.
Under the proposed framework, VA dealers will be regulated in a manner closely aligned with Type 1 (dealing in securities) regulated activity under the Securities and Futures Ordinance. This includes consideration of similar exemptions that already apply in the traditional securities market.
Meanwhile, the new custodian regime will focus on managing risks associated with safeguarding clients’ virtual assets, particularly the protection of private keys held in Hong Kong, with the aim of strengthening investor protection and asset security.
The regulators have encouraged interested firms to engage early with the SFC through pre-application discussions. According to the authorities, early engagement will allow potential applicants to better understand regulatory expectations and prepare to meet compliance obligations once the regimes are implemented.
Responding to market feedback, the FSTB and the SFC also launched a further consultation to bring VA advisory and management services within the licensing net.
These regimes will follow the principle of “same business, same risks, same rules,” mirroring standards applied to comparable services in the securities sector and giving the SFC enhanced supervisory powers over VA advisors and managers.SFC Chief Executive Officer Julia Leung said the progress ensures Hong Kong remains at the forefront of global digital asset development by fostering a trusted and sustainable ecosystem.Â
Financial Services and the Treasury Secretary Christopher Hui added that the licensing regimes strike a balance between innovation, risk management, and investor protection, reinforcing Hong Kong’s ambition to become a global hub for digital asset innovation.