Hong Kong Moves to License Crypto Dealers and Custodians

Hong Kong advances crypto regulation by approving licensing plans for virtual asset dealers, custodians, and advisors to strengthen oversight.

Hong Kong has taken another major step toward tighter crypto oversight. Plans to license crypto dealers and custodians confirmed by regulators. The move comes after the end of public consultations. Authorities want to enhance investor protection and market stability across digital assets.

Hong Kong Finalizes Licensing Push for Crypto Dealers and Custodians

In a joint announcement on Wednesday, regulators said there had been progress. The Financial Services and the Treasury Bureau and the Securities and Futures Commission were in the lead. They ended consultations on licensing regimes. Firms that provide crypto dealing or custody services will need licenses once rules apply.

Officials said there was broad support for the program based on market feedback. Therefore, authorities will go ahead with legislative proposals. The new regimes complete an important piece of the puzzle when it comes to Hong Kong’s digital assets. They are in line with the SFC’s ASPIRe regulatory roadmap. The objective is a safe and competitive virtual assets ecosystem.

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For crypto dealers, the regime will closely resemble that for securities. It will align with Type 1 regulated activities. Moreover, similar exemptions may apply. Therefore, regulators aim to ensure consistency across financial markets. Regulators try to apply equal standards for equal risks.

Crypto custodians will be subject to certain safeguards. The regime will focus on the private key management risks. Protecting client assets is a priority. Custodians need to have secure storage for virtual assets. These measures are taken to minimize operational and security failures.

Regulators invited early participation by industry participants. Firms can conduct pre-application discussions in advance with the SFC. This enables improved preparation and planning for compliance. Early involvement may also expedite future licensing processes.

In response to feedback, regulators started another consultation. This expansion includes virtual asset advisory and management services. The approach is based on the “same business, same risks, same rules” principle. Advisors and managers will be held to similar standards as securities firms.

Capital Rules, Stablecoins, and Market Impact in Focus

The new regimes have financial thresholds. The custodians of crypto exchanges must maintain a minimum of HKD 10 million in paid-up capital. They should also have liquid capital up to HKD 3 million. Depending on business models, there are different requirements.

Regulatory clarity may attract legitimate firms, officials said. Licensed brokers will eventually have access to global liquidity pools. Investor confidence may be enhanced by improved standards. Hong Kong wants to become a trusted crypto center.

SFC Chief Executive Julia Leung raised the issue of long-term benefits. Responsible innovation is supported by the framework, she said. According to her, it builds competitiveness and resilience. Authorities believe digital assets have an economic benefit to the wider economy.

Financial Secretary Christopher Hui echoed this view. He said the proposal covers a balance of growth and risk management. Investor protection is key to policy design. The framework supports the global ambitions in Hong Kong with regards to digital finance.

Separately, stablecoin is already under regulation. A licensing regime for fiat-referenced stablecoins began on August 1, 2025. The Hong Kong Monetary Authority is in charge of monitoring this framework. The first licenses are projected for early 2026.

Taken together, these measures indicate regulatory maturity. In Hong Kong, oversight is tightening with a focus on supporting innovation. The licensing push is consistent with trends in regulation worldwide. Market participants are now waiting for legislative timelines and specifics in their implementation.

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