- Hong Kong to introduce licensing requirements for virtual asset dealing and custody firms, expanding its crypto regulatory framework.
- Firms providing crypto dealings or custody services must obtain licenses, ensuring higher regulatory oversight.
- Hong Kong aims to become a leading crypto hub, fostering a trusted, competitive, and sustainable ecosystem.
Hong Kong is set to introduce new licensing requirements for virtual asset dealing and custody firms, marking a significant expansion of its crypto regulatory framework. The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) have concluded consultations on the proposed regimes, paving the way for their new implementation. This move could possibly build up the city’s existing stablecoin licensing blueprint and tokenisation guidance.
Enhanced Oversight for Crypto Dealers and Custodians
These new licensing regimes will require more firms in providing crypto dealings or custody services in Hong Kong to obtain those licenses, which will help ensure a higher level of regulatory oversight. The city has already mandated the licensing of crypto trading platforms, with 11 companies already having received approval from the SFC to date.
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A Hub for Crypto Innovation
The country’s push for these crypto regulations is driven by the country’s ambition to become the leading crypto hub. The city’s business-friendly tax regimes and reputation as a finance gateway between mainland China and these global capital markets make it an attractive destination for crypto firms.
Julia Leung, CEO of the SFC, said that “the further development of Hong Kong’s crypto regulatory framework would help the city maintain its position in global digital asset market developments by fostering a trusted, competitive and sustainable ecosystem.”
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Expanding Regulatory Scope
The SFC has also launched a new consultation on introducing these licensing regimes for crypto advisory service providers and management service providers. This proposal links the new regimes to Hong Kong’s existing Anti-Money Laundering (AML) framework and Counter-Terrorist Financing Ordinance, ensuring more cohesive regulatory approach. The consultation seeks feedback on licensing scope, regulatory powers, and sanctions, among the other matters.
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