Hong Kong Proposes to Fully Regulate Virtual Asset Trading, Custody, Advisory, and Asset Management Businesses under Licensing Regime, to Submit Amendment Bill Within the Year

On June 2, the Hong Kong Special Administrative Region (SAR) Government’s Financial Services and the Treasury Bureau announced that after rolling out rules requiring virtual asset trading platforms to hold licenses and regulations governing stablecoin issuers, Hong Kong will launch a unified regulatory framework for a full range of virtual asset activities—including trading, custody, investment advisory, and asset management—next. The initiative aims to strengthen the city’s digital asset ecosystem. Under the proposal, any firm in Hong Kong offering virtual asset trading, custody, investment advice, or asset management will need to secure a license or registration from Hong Kong’s Securities and Futures Commission (SFC). The regulatory scope will align with existing designated regulated activities under the Securities and Futures Ordinance: specifically, Type 1 (securities trading), Type 4 (investment advice), and Type 9 (asset management). For virtual asset custody services, regulators will focus on private key management and risks related to safeguarding customer assets. The Hong Kong government noted there are currently 13 licensed virtual asset trading platforms in the city, plus two stablecoin issuer licenses already issued. The upcoming regulatory framework will follow the core principle of "same business, same risk, same rules," mandating licensed firms to meet strict standards for capital adequacy, risk management, financial reporting, professional competence, and customer asset protection. A key clarification: authorities have explicitly stated there will be no transitional period allowing existing service providers to operate without a license. All relevant entities must submit applications for a license or registration proactively. Additionally, any unlicensed firm cannot actively promote virtual asset services to the Hong Kong public—either within Hong Kong or overseas. The Hong Kong Financial Services and the Treasury Bureau added that legislative proposals are now being drafted, with plans to submit a draft amended ordinance to the city’s Legislative Council by 2026. Market observers believe that once the new system is fully implemented, Hong Kong will become one of the only jurisdictions globally to regulate the entire virtual asset value chain simultaneously, covering trading platforms, stablecoins, custody, advisory, and asset management. This will further solidify its position as a leading international digital asset hub.