Hong Kong plans to complete proposals to regulate virtual asset traders and custodians and submit the rules to the Hong Kong Legislative Council for completion in 2026, the Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) said on Wednesday.
The proposals, developed after two months of public consultation, which received more than 190 responses, aim to create a licensing framework for virtual asset trading and custody services. The rules will be governed by the Anti-Money Laundering and Counter-Terrorism Financing Regulations and reflect existing securities trading requirements.
The Hong Kong government is developing a regulatory environment to encourage the development of the city’s cryptocurrency industry in an effort to establish it as Asia’s premier cryptocurrency hub, replacing Singapore. Its stance contrasts with China, which is stepping up its crackdown on virtual currencies.
In February this year, the China Securities Regulatory Commission announced a new licensing system for over-the-counter trading and also conducted a review of derivatives and margin trading of virtual assets. In April this year, it provided staking services to licensed exchanges and funds despite being subject to strict asset control and risk disclosure requirements. The spot cryptocurrency exchange-traded fund has been trading since 2024.
The proposed custody regime focuses on protecting private keys and safeguarding customer assets, while dealer rules are consistent with the licensing expectations of securities intermediaries. Both are part of the SFC’s wider ASPIRe roadmap, which aims to improve access to regulated virtual asset markets.
The China Securities Regulatory Commission has also begun soliciting opinions on expanding the scope of supervision to virtual asset advisors and managers. The regulator said the system will follow the principle of “same business, same risks, same rules” and adopt similar standards to securities advisory and asset management services. The deadline for comments is January 23.