Hong Kong initiates licensing regimes for virtual asset providers, enhancing regulatory framework for digital assets

FSTB and SFC publish consultation conclusions on legislative proposals for regulating virtual asset dealing and custodian services

The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) today (December 24) jointly published the consultation conclusions on the legislative proposals for establishing licensing regimes for virtual asset (VA) dealing and custodian service providers. The FSTB and the SFC also launched a further public consultation today for one month on establishing separate licensing regimes for VA advisory and management service providers.

During the two-month public consultation period completed this August, 101 and 93 submissions were received on the proposed licensing regimes for VA dealing service providers and VA custodian service providers respectively. The majority of respondents, including market participants, industry associations, business and professional organisations, expressed clear support for expanding the regulatory scope to cover VA dealing and custodian services, following the introduction of the licensing regime for the VA trading platform in June 2023. This is considered a critical step to promote the steady and sustainable development of the digital asset (Note) ecosystem in Hong Kong. The respondents also indicated support for the overall direction of the proposed regulatory requirements and implementation arrangements, while suggesting enhancements and seeking clarifications on certain aspects.

The proposed licensing regime for VA dealing service providers will largely align with that for Type 1 (dealing in securities) regulated activity under the Securities and Futures Ordinance (Cap. 571) as applicable to conventional securities dealing activities. As for VA custodian service providers, the proposed licensing regime will focus on managing risks relating to safekeeping private keys of client VAs in Hong Kong, which is the core risk area of VA custody, with a view to enhancing the security of client assets.

The Secretary for Financial Services and the Treasury, Mr Christopher Hui, said, "The proposed establishment of licensing regimes for VA dealing and custodian service providers marks a significant step in enhancing our legal framework for digital assets. The proposed licensing regimes strike a prudent balance among fostering market development, managing risks and protecting investors. They will help realise our vision for building a trusted and sustainable digital asset ecosystem, with a view to establishing Hong Kong as a global hub for digital asset innovation."

The Chief Executive Officer of the SFC, Ms Julia Leung, said, "The significant progress in our VA regulatory framework ensures Hong Kong remains at the global forefront of digital asset market developments by fostering a trusted, competitive and sustainable ecosystem. With an unwavering commitment to responsible innovation, we are laying the foundation for a vibrant yet resilient ecosystem that may bring vast benefits to Hong Kong's financial markets and the broader economy in the long run."

Meanwhile, in response to the feedback received, the FSTB and the SFC also launched a further publicconsultation today on establishing separate licensing regimes for VA advisory and management service providers, instead of covering the relevant VA activities under the licensing regime for VA dealing service providers as originally proposed. This revised regulatory approach will model itself on the regulatory framework applicable to the conventional securities market, and will provide better clarity as regards the scope of activities regulated under different VA licensing regimes. The further consultation will last for one month, ending on January 23, 2026.

The FSTB and the SFC welcome views from the public on the proposed licensing regimes for VA advisory and management service providers. Submissions should be sent by post (24/F, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong) or by email (vadealing-consult@fstb.gov.hk) to the FSTB.

Details of the consultation conclusions, as well as the further public consultation for licensing regimes for VA advisory and management service providers, are available on the webpages of the FSTB and the SFC:

*Consultation Conclusions on Legislative Proposal to Regulate Dealing in VA and Further Public Consultation on Legislative Proposal to Regulate VA Advisory Service Providers and VA Management Service Providers (www.fstb.gov.hk/fsb/en/publication/consult/doc/VAdealing_consultation_conclusion_e.pdf /apps.sfc.hk/edistributionWeb/gateway/EN/consultation/conclusion?refNo=25CP6)

*Consultation Conclusions on Legislative Proposal to Regulate VA Custodian Services (www.fstb.gov.hk/fsb/en/publication/consult/doc/Custodian_consultation_conclusion_e.pdf /apps.sfc.hk/edistributionWeb/gateway/EN/consultation/conclusion?refNo=25CP7)

With broad market support, and taking into account the feedback to be received in the further consultation, the FSTB and the SFC will finalise the legislative proposals for the licensing regimes, with a target of introducing the relevant bill into the Legislative Council in 2026.

Note: "Digital asset" is a general term with a broad scope, covering, among others, "virtual asset", which is a legally defined term under the existing Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).

Source: AI-found images

Latest progress on suspected leakage of leachate from WENT Landfill

Regarding the suspected leakage of leachate from West New Territories (WENT) Landfill that occurred yesterday (July 8), a spokesperson for theEnvironmental Protection Department (EPD)provided the following details on the latest progress of the follow-up work:

The landfill contractor confirmed the source of the leakage last night and immediately commenced containment of the leakage at the source, remediation and overnight monitoring. Following urgent interception, the leakage of leachate through a stormwater outfall to Tai Shui Hang stopped last night, and no abnormalities were observed at the stormwater outfall and in nearby water bodies. Affected by the heavy rain early this morning, a small amount of leachate was spotted at the source location, which was a temporary condition during maintenance work. The contractor then immediately strengthened the pumping and interception measures. No leachate flowed into the downstream stormwater outfall or Tai Shui Hang, and the situation remains under control.

After on-site investigation, the incident is believed to have caused by a blockage in sub-soil leachate trench beneath the landfill's operational area, coupled with persistent heavy rain yesterday afternoon. This resulted in leachate flowing together with rainwater into the stormwater drains along the landfill haul roads, and subsequently to Tai Shui Hang. The contractor completed the source remediation work this morning, which included intercepting the leak and continuing to remove any remaining leachate. At the same time, further preventive and cleanup measures have been implemented, including removing stagnant water from the drainage channels and installing additional silt curtain in Tai Shui Hang to enhance containment. The contractor will continue to thoroughly clean the affected stormwater outfall to remove any traces of leachate remaining on the inner walls of the outfall.

The EPD further confirmed that no new leakage was found on-site during an investigation this morning, while tankers remain on standby at the scene as a precautionary measure. Based on on-site observations and the performance of the silt curtains, the EPD assessed that the amount of leachate leaked into Tai Shui Hang yesterday was limited. Given that the rainy season has begun, the EPD has demanded that the contractor strengthen the inspection and maintenance of the sub-soil leachate trenches and the drainage system to minimise the risk of similar incidents occurring during periods of intense rain.

In addition, the EPD continued today to collect water samples from Tai Shui Hang and the Deep Bay to monitor any changes in water quality. Preliminary analysis revealed that pH and the dissolved oxygen levels in the water samples are within the normal ranges,without signs of significant change in water quality. No fish deaths were found at the scene, and there were no signs of any significant ecological impact nearby. The EPD will continue to closely monitor the water quality in Tai Shui Hang and the Deep Bay.

Source: AI-found images