Hong Kong Cryptocurrency Asset Management New Regulation Faces Industry Resistance, Association Warns 'Not Global, Then Local' License Requirement Could Stifle Innovation

**January 20 – A Hong Kong securities industry association has raised concerns about the city’s proposed regulatory framework for digital asset management, warning the reforms could discourage traditional asset management firms from entering the cryptocurrency space.** The Hong Kong Securities and Futures Professionals Association (HKSFPA) submitted a comment letter to regulators on Tuesday opposing a proposed adjustment that would eliminate the existing “minimum exemption threshold” for Type 9 asset management firms. Under current rules, firms holding a Type 9 license (covering discretionary investment portfolio management and asset management services) only need to report to regulators if they allocate less than 10% of their total fund assets to crypto assets—no additional license upgrade required, per a report from local law firm King & Wood Mallesons. The HKSFPA noted the proposed reform would scrap this threshold, meaning even a 1% allocation to Bitcoin would force firms to obtain a full virtual asset management license. The group called the “all-or-nothing” regulatory approach *lacking proportionality*, arguing limited risk exposure would still saddle firms with significant compliance costs—potentially blocking traditional players from exploring the cryptocurrency asset class. This industry pushback comes amid a fast-tracked regulatory process. Last December, Hong Kong authorities released a summary of the June-launched public consultation on the proposed reforms. Hong Kong’s Financial Services and the Treasury Bureau (FSTB) and Securities and Futures Commission (SFC) have since further consulted on implementing a supplementary licensing regime for crypto trading, advisory, and management services.