Hong Kong Proposes to Fully Regulate Virtual Asset Trading, Custody, Advisory, and Asset Management Businesses under Licensing Regime, to Submit Amendment Bill Within the Year

BlockBeats News, June 2nd. The Hong Kong Special Administrative Region Government's Financial Services and the Treasury Bureau stated that following the implementation of the virtual asset trading platform licensing regime and the stablecoin issuer regulatory regime, the next phase in Hong Kong will establish a unified regulatory framework covering virtual asset trading, custody, investment advice, and asset management services, further enhancing the digital asset ecosystem.

According to the proposal, any institution engaged in virtual asset trading, custody, providing investment advice, or asset management services in Hong Kong will generally be required to obtain a license or registration from the Securities and Futures Commission (SFC) of Hong Kong. The regulatory scope will correspond to regulated activities under the Securities and Futures Ordinance, including Type 1 (securities trading), Type 4 (investment advisory), and Type 9 (asset management). For virtual asset custody services, the regulatory focus will be on private key management and customer asset security risks.

The Hong Kong government stated that Hong Kong currently has 13 licensed virtual asset trading platforms and has issued 2 stablecoin issuer licenses. The future regulatory framework will be implemented based on the principle of "same business, same risk, same rules," requiring licensed institutions to meet strict standards in terms of capital adequacy, risk management, financial reporting, professional capabilities, and customer asset protection.

It is worth noting that the authorities have clearly stated that there will be no transitional arrangements for existing service providers to be deemed licensed. Relevant institutions must actively apply for a license or registration. At the same time, any institution without a license or registration shall not actively promote related virtual asset services to the Hong Kong public in Hong Kong or overseas.

The Hong Kong Financial Services and the Treasury Bureau revealed that relevant legislative proposals are being formulated, with the aim of submitting a draft amending ordinance to the Legislative Council by 2026. Market participants believe that if the new system is in place, Hong Kong will become one of the few jurisdictions globally to regulate the entire chain of trading platforms, stablecoins, custody, advisory, and asset management simultaneously, further solidifying its position as an international digital asset hub.