Hong Kong Treasury Department Plans to Submit Comprehensive Regulatory Draft on Virtual Assets Within the Year
Miles Bennett
Hong Kong plans to legislate a full licensing regime covering trading, custody, advisory, and asset management of virtual assets this year — raising both the entry bar and investor protection across the crypto value chain.
What exactly will the new regime cover?
The Financial Services and the Treasury Bureau (FSTB) is drafting a licensing system spanning four segments: virtual-asset trading, custody, advisory, and asset management.
In plain terms = previously only trading platforms needed a licence; now every link — buy/sell, safekeeping, advice, fund management — requires one.
The guiding principle is "same business, same risk, same rules" — virtual-asset firms will face requirements aligned with those for traditional brokers and asset managers.
Who must obtain a licence?
Anyone conducting these four types of business in Hong Kong must be licensed or registered with the Securities and Futures Commission (SFC), unless exempted.
Banks (authorized institutions) and stored-value-facility licensees offering virtual-asset services must also register with the SFC.
This means → there is no grey zone where holding a banking licence exempts a firm from crypto oversight. All participants play by the same rules.
Why is custody singled out?
The custody licence zeroes in on one core risk: managing and safeguarding clients' private keys — the cryptographic credentials that control digital assets.
Put simply = if a private key is lost or stolen, the assets are gone for good. This is the single biggest security vulnerability in crypto.
A dedicated licence forces custodians to meet the same safety standard as traditional securities custody on key management.
What are the penalties? Is there a transition period?
Without a licence or registration, firms are banned from actively marketing virtual-asset services to the Hong Kong public — regardless of whether they operate onshore or offshore.
Penalties will be consistent with the existing trading-platform regime, emphasising deterrence and fairness.
The FSTB explicitly stated it will not offer a "deemed licensed" transition arrangement, but will allow adequate time for firms to adjust and encourages operators to begin pre-application discussions now.
This means → for service providers wanting to stay in the Hong Kong market, the clock is already ticking.
Where does Hong Kong's crypto regulation stand today?
Trading platforms: licensing regime effective since June 2023; 13 platforms now licensed.
Stablecoins: issuer regime launched last August; 2 licences granted so far.
Cyberport's Web3 hub hosts more than 310 Web3 companies; Hong Kong ranks first globally in fintech in the latest Global Financial Centres Index.
This reflects a clear shift from single-point licensing to full-chain regulation — and the pace is visibly accelerating.
Content is for reference only, not financial advice.