On 27 June 2025, the Hong Kong Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Securities and Futures Commission (HK SFC) jointly released two consultation papers i.e. Public Consultation on Legislative Proposal to Regulate Dealing in Virtual Assets and Public Consultation on Legislative Proposal to Regulate Virtual Asset Custodian Services which proposes statutory licensing regimes for virtual asset dealers and custodians.
These proposed legislative frameworks form a central pillar of the Hong Kong SAR Government’s digital asset development agenda, following the release of the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong on 26 June 2025. They are also aligned with the “Access” pillar of the SFC’s ASPIRe roadmap, issued on 19 February 2025, to ensure safe, responsible, and globally integrated virtual asset markets.
The proposed legislative regimes will mandate licensing, supervision, and compliance standards for entities engaging in dealing in virtual assets and those offering virtual asset custody services. The HK SFC will be the designated authority to license and regulate these service providers, ensuring that they operate under robust governance, AML/CFT controls, asset safeguarding protocols, and client protection obligations. The proposed frameworks adopt a “same business, same risks, same rules” principle to ensure regulatory consistency across comparable financial activities.
According to Ms Julia Leung, Chief Executive Officer of the HK SFC: “The proposed introduction of the regulatory regimes for dealers and custodians would complete a digital asset ecosystem that is both safe and vibrant for institutional and retail investors.”
The launch of the two consultation papers i.e. Public Consultation on Legislative Proposal to Regulate Dealing in Virtual Assets and Public Consultation on Legislative Proposal to Regulate Virtual Asset Custodian Services follows the release of the Policy Statement 2.0, which outlined the Government’s updated vision for digital asset market development. These proposals are aimed at establishing a statutory foundation for overseeing key VA intermediaries and addressing identified regulatory gaps in asset custody and trading services.
Mr Christopher Hui, Secretary for Financial Services and the Treasury, affirmed this direction: “The proposed licensing regimes will lay a solid ground for us to establish a comprehensive regulatory framework for digital assets with investor and customer protection at its core foundation.”
The Public Consultation on Legislative Proposal to Regulate Dealing in Virtual Assets and the Public Consultation on Legislative Proposal to Regulate Virtual Asset Custodian Services invite comments from stakeholders, including licensed intermediaries, fintech firms, institutional investors, global exchanges, legal advisors, and the general public. Interested parties may submit their responses to the Hong Kong FSTB or HK SFC by 29 August 2025.
After the conclusion of consultation period, the authorities are expected to initiate legislative drafting, likely through amendments to the Hong Kong Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) and/or the Hong Kong Securities and Futures Ordinance (Cap. 571), to formally establish the licensing frameworks.
(Source: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=25PR99)
