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

HKSAR Government strongly disapproves of and rejects European Parliament's Recommendation on EU-China political relations

The Government of the Hong Kong Special Administrative Region (HKSAR) yesterday (October 9) expressed firm opposition to and strong dissatisfaction with, and strongly condemned the so-called Recommendation on EU-China political relations by the European Parliament, which made biased and untrue slanders in the section concerning Hong Kong.

A spokesman for the HKSAR Government stressed, "The HKSAR is an inalienable part of the People's Republic of China. It is a local administrative region that enjoys a high degree of autonomy under 'one country, two systems' and comes directly under the Central People's Government. The HKSAR Government will resolutely, fully and faithfully implement the Hong Kong National Security Law (HKNSL), the Safeguarding National Security Ordinance (SNSO) and other relevant laws so as to effectively prevent, suppress and impose punishment for acts and activities endangering national security, safeguard the lawful rights and interests enjoyed by Hong Kong people and other persons in the HKSAR in accordance with the law, and provide a solid foundation for developments in Hong Kong's economy, social life and other aspects. Its overarching goal is to ensure the steadfast and successful implementation of 'one country, two systems'.

"The implementation of the HKNSL in the past six years or so has enabled the livelihood and economic activities of the Hong Kong community at large to swiftly resume to normal and the business environment to be restored and improved continuously. Besides maintaining its position as the world's freest economy, Hong Kong has risen to top spot in cross boundary wealth management worldwide and is ranked second in world competitiveness. The city is ranked third among international financial centres and comes first in the world in terms of funds raised through initial public offerings in 2025. Hong Kong remains high in the overall ranking and continues to be ahead of the western countries which often unreasonably criticise the rule of law and human rights situation of Hong Kong in the 2025 World Justice Project Rule of Law Index. These achievements are built upon the freedom and stability brought to Hong Kong society by the HKNSL, the SNSO, other relevant laws of the HKSAR, and the work of safeguarding national security.

"It is each and every sovereign state's inherent right, under international law and international relations based on the Charter of the United Nations, to enact laws safeguarding national security, and is also an international practice. The HKSAR Government strongly urges the European Parliament to immediately stop its slanders and smears against Hong Kong, as well as cease issuing in any form so-called recommendation that distort facts and spread alarmist narratives, and interfering in Hong Kong affairs, which are purely China's internal affairs. The HKSAR Government will, as always, safeguard independent judicial power and fully supports the Judiciary in exercising its judicial power independently, and at the same time steadfastly safeguard national sovereignty, security and development interests, and defend the dignity of the rule of law."

Source: AI-found images