The Financial Services and the Treasury Bureau and the Securities and Futures Commission (SFC) have launched a joint public consultation on the legislative proposals for establishing licensing regimes for digital asset dealing and custodian service providers.
The public consultation will last for two months until August 29, 2025, according to a statement on Friday.
Under the proposed regimes, any person who carries on a business of providing digital asset dealing services in Hong Kong will have to be licensed by or registered with the SFC, be it through a physical outlet or other platforms, both simple dealing services like smaller-scale conversions between different such assets or between virtual assets and fiat money and more complex services like brokerage activities, block trading activities, and other activities of advisors or asset managers.
Virtual asset custodian services providers – safekeeping or instruments enabling transfer of digital assets on behalf of clients – will also have to be licensed by or registered with the SFC.
The above-mentioned services providers 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.
Under the two proposed licensing regimes, the SFC will be the standard setter, responsible for formulating regulatory requirements applicable to licensed and registered digital asset dealing and custodian service providers. 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.
STAFF REPORTER
