Hong Kong Launches Consultation for Digital Asset Licensing Regimes to Enhance Investor Protection and Ecosystem Growth

FSTB and SFC launch consultation on legislative proposals for regulating digital asset dealing and custodian services

The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) today (June 27) launched a joint public consultation on the legislative proposals for establishing licensing regimes for digital asset (DA) (referred to as "virtual asset" in the consultation document) (Note) dealing and custodian service providers. The public consultation will last for two months until August 29, 2025.

To promote the sustainable development of Hong Kong's DA ecosystem while protecting investors and managing risks, the Government and financial regulators have been closely monitoring market developments and maintaining dialogue with industry stakeholders to continuously review and enhance Hong Kong's regulatory framework for DA activities.

In this regard, the FSTB conducted a public consultation between February and April last year on the legislative proposals for establishing a licensing regime for DA over-the-counter service providers. Based on the feedback received, the FSTB, in collaboration with the SFC, has revised the legislative proposals. By launching the public consultation today, the FSTB and the SFC seek to gather views from stakeholders on the framework and key elements of the revised legislative proposals.

The revised legislative proposals cover the licensing regime for DA dealing service providers and the licensing regime for DA custodian service providers. Under the two proposed licensing regimes, the SFC will be the standard setter, responsible for formulating regulatory requirements applicable to licensed and registered DA dealing and custodian service providers.Meanwhile, the Hong Kong Monetary Authority (HKMA) will be the frontline regulator for banks and stored value facilities (SVFs) registered to provide the relevant services. Both the SFC and the HKMA will be provided with the powers to implement the regimes in accordance with the statutory requirements.

The key elements of the proposed licensing regimes are as follows:

(1) Licensing Regime for DA Dealing Service Providers

* Any person who carries on a business of providing DA dealing services in Hong Kong will have to be licensed by or registered with the SFC;

*Irrespective of whether the relevant DA dealing services are provided through a physical outlet and/or other platforms, both simple dealing services (e.g. smaller-scale conversions between different DAs or between DAs and fiat money) and more complex services (e.g. brokerage activities, block trading activities, and other activities of advisors or asset managers) will fall under the scope of the licensing regime;

*Licensed or registered providers of DA dealing services will need to meet fit-and-proper criteria and comply with a range of regulatory requirements, including those related to financial resources, knowledge and experience, risk management, financial reporting and disclosure, conduct of business, information and notifications, record keeping, proper protection of client assets, and investor protection safeguards; and

*The licensing regime will be fully implemented on the date the relevant statutory provisions come into effect, with no deeming arrangement.

(2) Licensing Regime for DA Custodian Service Providers

*Any person carrying on a business in Hong Kong of providing DA custodian services will have to be licensed by or registered with the SFC. The provision of DA custodian services as a business will be defined as - by way of business, the safekeeping of (i) DAs on behalf of clients; or (ii) instruments enabling transfer of DAs of clients (including but not limited to private keys) on behalf of clients; and

*Same as DA dealing services, licensed or registered providers of DA custodian services will need to meet fit-and-proper criteria and comply with a range of regulatory requirements, including those related to proper protection of client assets, financial resources, knowledge and experience, risk management, financial reporting and disclosure, conduct of business, information and notifications, and record keeping. Similarly, the licensing regime will be fully implemented on the date the relevant statutory provisions come into effect, with no deeming arrangement.

The consultation papers are available on the webpages of the FSTB and the SFC:

*Licensing Regime for DA Dealing Service Providers (www.fstb.gov.hk/fsb/en/publication/consult/doc/VADEALING_consultation_paper_en.pdf / apps.sfc.hk/edistributionWeb/gateway/EN/consultation/doc?refNo=25CP6)

*Licensing Regime for DA Custodian Service Providers (www.fstb.gov.hk/fsb/en/publication/consult/doc/VACUSTODY_consultation_paper_en.pdf/ apps.sfc.hk/edistributionWeb/gateway/EN/consultation/doc?refNo=25CP7)

The Secretary for Financial Services and the Treasury, Mr Christopher Hui, said, "We have the public consultation on the establishment of licensing regimes for DA dealing and custodian service providers launched today, right after our release of the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong yesterday. By this, we want to deliver an important message to the public that while we are striving to build Hong Kong into a premier global hub for DAs, upholding investor protection is still our utmost concern. The proposed licensing regimes will lay a solid foundation for us to establish a comprehensive regulatory framework for DAs with investor and customer protection at its core. The move will also help realise our vision to build Hong Kong's DA ecosystem into a highly trusted one that will flourish sustainably and responsibly in a risk-managed manner, thereby delivering concrete benefits to the real economy and financial markets."

The Chief Executive Officer of the SFC, Ms Julia Leung, said, "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. In balancing industry growth with robust investor protection, we join hands with the Hong Kong SAR Government to build Hong Kong into a trusted and sustainable platform that taps into global liquidity. We will also stay committed to close collaboration with our industry stakeholders to broaden participation and further raise the vibrancy of Hong Kong's ecosystem."

The FSTB and the SFC welcome views from the public and stakeholders on the proposed licensing regimes. Submissions should be sent by post (24/F, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong) or by email to the FSTB on or before August 29, 2025:

* Licensing Regime for DA Trading Service Providers: vadealing-consult@fstb.gov.hk

* Licensing Regime for DA Custodian Service Providers: vacustody-consult@fstb.gov.hk

During the consultation period, the FSTB and the SFC will also meet with relevant sectors to gather feedback.

Note: The term "digital asset" includes "virtual asset". As "virtual asset" is a legally defined term under the existing Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), the term "virtual asset" is still adopted in the consultation papers in this public consultation. The Government will review whether another term should be used in the legislation in lieu of "virtual asset" so as to better reflect the nature of this asset class, and align with the understanding across international markets.

Update on chikungunya fever

The Centre for Health Protection (CHP) of the Department of Health announced that, as of 5pm today (January 4), no new cases of chikungunya fever (CF) had been recorded.

Latest surveillance data

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Hong Kong has recorded a total of 82 confirmed CF cases last year. Among them, 11 were local cases, and the rest were imported cases.

Since the beginning of 2025, and as of December 10, 2025, a total of 502 264 CF cases and 186 CF-related deaths have been reported in over 40 countries/territories. Cases have been reported in the Americas, Africa, Asia, and Europe. Although the northern hemisphere has entered the winter season, temperatures in subtropical and some temperate regions remain elevated due to climate change, creating favourable conditions for mosquito breeding. In addition, CF outbreaks continue to occur in many countries worldwide. The risk of imported cases persists. Members of the public should check the situation of the destinations before travelling abroad, especially when travelling to Southeast Asian countries.

Government's comprehensive follow-up actions

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Given that some local cases of CF have visited the Tsing Yi Nature Trails or the surrounding area in November last year, the trails are currently closed until further notice. Relevant government departments continue to conduct large-scale mosquito control and prevention efforts along the trails, and the CHP appeals to the public not to enter the area in order to reduce the risk of contracting CF and to avoid exposure to chemicals or interfering with the mosquito control operations. Since the confirmation on December 10, 2025, of a case involving a person who had visited the Tsing Yi Nature Trails on November 30, 2025, no further local cases have been recorded to date. The CHP continues to urge individuals who have recently hiked along the Tsing Yi Nature Trails to seek medical attention as soon as possible if they develop relevant symptoms and to call the enquiry hotline (Tel: 2125 2373), which operates from 9am to 6pm.

The Food and Environmental Hygiene Department (FEHD) has been continuously conducting intensive fogging operations to eliminate adult mosquitoes along the Tsing Yi Nature Trails and the surrounding area. At suitable locations, large ultra-low volume foggers have been deployed, and a robot dog is being put on trial to enhance operational effectiveness. The FEHD has also set up new mosquito trapping devices, cleared discarded containers and garbage that could cause stagnant water, and applied larvicide oil or larvicides in areas with stagnant water that cannot be removed immediately. The FEHD has been collaborating with the Kwai Tsing District Office, the Lands Department and the Drainage Services Department to strengthen efforts in eliminating potential mosquito breeding sites along the Tsing Yi Nature Trails. Pamphlets have been distributed to hikers in the area, urging citizens to be vigilant against mosquito infestations and take personal protective measures. The FEHD has also held meetings of the interdepartmental task forces on anti-mosquito work across districts to discuss the latest developments regarding the situation and plan accordingly to co-ordinate relevant departments and stakeholders in strengthening mosquito prevention and control measures in areas under their purview.

Continuously strengthening prevention and control

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The FEHD and relevant departments have comprehensively enhanced the mosquito control operations in Hong Kong since July last year, and this has continued. Among these, the FEHD has conducted vector investigations and targeted mosquito control operations against the imported and local cases. In light of the local case, the FEHD has immediately conducted follow-up actions, including:

carrying out intensive fogging in scrubby areas within a 250-metre radius of the relevant locations to kill adult mosquitoes;

carrying out inspections of the locations, removing stagnant water, applying insecticides and disposing of abandoned water containers every week with a view to preventing mosquito breeding; and

enhancing public education efforts through organising health talks, setting up mobile education stations, and distributing publicity leaflets.

The abovementioned measures will be continued. Furthermore, the Government will further enhance the mosquito control efforts in addition to the existing measures.

Preventive measures to be taken by the public

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Members of the public should use DEET-containing insect repellents or other effective active ingredients properly to prevent mosquito bites, but the following precautions should be taken when using them:

read the label instructions carefully first;

apply right before entering an area with a risk of mosquito bites;

apply on exposed skin and clothing;

use DEET of up to 30 per cent for pregnant women and up to 10 per cent for children (for children who travel to countries or areas where mosquito-borne diseases are endemic or epidemic and where exposure is likely, those aged 2 months or above can use DEET-containing insect repellents with a DEET concentration of up to 30 per cent);

apply sunscreen first, then insect repellent;

reapply only when needed and follow the instructions; and

in addition to DEET, there are other insect repellents available on the market containing different active ingredients, such as IR3535 and picaridin. When using any insect repellent, the public should follow the usage instructions and precautions on the product label.

The FEHD also appeals to members of the public to continue to stay alert and work together to carry out mosquito prevention and control measures early, including inspecting their homes and surroundings to remove potential breeding grounds, changing water in vases and scrubbing their inner surfaces, removing water in saucers under potted plants at least once a week, and properly disposing of containers such as empty cans and lunch boxes. The FEHD also advises members of the public and property management agencies to keep drains free of blockage and level all defective ground surfaces to prevent the accumulation of water. They should also scrub all drains and surface sewers with an alkaline detergent at least once a week to remove any mosquito eggs.

The public should call 1823 in case of mosquito problems, and may visit the following pages for more information: the CF page of theCHPand theTravel Health Service, the latestTravel Health News,tips for using insect repellents, and the CHPFacebook Page,Instagram AccountandYouTube Channel, and also theMosquito Prevention and Control dedicated pageof the FEHD.

Source: AI-found images