Hong Kong is positioning itself as a regulated virtual asset hub by implementing and expanding regulated licensing regimes for virtual asset service providers, including virtual asset trading platforms. On 24 December 2025, the Hong Kong Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) jointly published two separate consultation conclusions. One addresses the proposed licensing regime for virtual asset (VA) dealers (VA Dealing Consultation Conclusions) and the other covers the separate licensing regime for VA custodians (VA Custodian Conclusions).
Alongside the publication of the VA Dealing Consultation Conclusions and VA Custodian Consultation Conclusions, the FSTB and SFC also launched a further public consultation (Section B of the VA Dealing Consultation Conclusions) on proposed licensing regimes for VA advisory service providers and VA management service providers. This further consultation indicates that the FSTB and the SFC intend to extend regulatory oversight beyond trading platforms, dealers, and custodians to capture firms providing investment advice on virtual assets and firms managing portfolios investing in virtual assets. Taken together, the Consultation Conclusions and Further Consultation set the stage for a widening regulatory perimeter for non-securities VA services.
The proposed VA dealing licensing regime and VA custody licensing regime draw significantly from existing frameworks applicable to traditional financial advisers and fund managers. The regimes sit primarily under amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and bring certain virtual asset service providers into a supervisory framework led by Hong Kong’s Securities and Futures Commission (SFC).
The FSTB and SFC are preparing the draft legislation, aiming to introduce a bill into the Legislative Council in 2026 to amend the AMLO. The FSTB’s role remains primarily in designing and advancing policy and legislation, whereas the SFC applies these rules to financial firms across licensing, supervision, and enforcement.
Compliance leaders should take note that the FSTB and SFC will expect VA dealers, custodians, and other VA service providers within scope to follow a closer alignment with traditional financial services expectations. Firms should consider the impacts, ahead of legislative implementation, to how they evidence compliance, market integrity controls, custody arrangements, and AML/CFT standards.
VA Dealing Scope
The VA Dealing Consultation Conclusions set out a crucial refinement in the scope of the VA dealing definition under the AMLO in conceptually aligning it with that of Type 1 regulated activity (dealing in securities) under the Securities and Futures Ordinance (SFO), following the “same activity, same risks, same regulation” principle. The revised scope focuses on persons who, by way of business, make or offer to make agreements, or induce others to enter into agreements, with a view to acquiring or disposing of VAs.
Virtual Asset Custody Scope
The VA Custodian Consultation Conclusions indicate that custody focuses on safeguarding the means by which clients’ VAs can be transferred, including control over private keys or other mechanisms that enable movement of those assets. The conclusions also provide a practical indicator of when a provider will fall in scope. If a provider can unilaterally transfer a client’s VAs, it is likely to require authorisation under the proposed regime. In practice, providers may need to obtain an SFC licence, or, where the legislation provides for it, a registration pathway may apply for authorised institutions, with the HKMA involved in supervision of banks where applicable. Where a technology provider’s structure allows clients to independently access and manage assets at all times, the provider may fall outside the regime’s scope and may be assessed case-by-case, taking the provider’s functional control into consideration.
Fundamental Expectations Under the VATP Framework
Hong Kong’s VATP regime consistently points firms back to four practical areas:
1) Governance and “fit and proper” oversight
Licensing requires demonstrable senior management accountability, resourcing, and competence. Firms need clear lines of responsibility, risk ownership, and evidence that compliance does not stop at policy documents.
2) AML/CFT controls tailored to virtual assets
Hong Kong’s regulators apply risk-based AML/CFT expectations to licensed corporations and SFC-licensed virtual asset service providers. Firms must implement controls that reflect the realities of virtual assets, including onboarding, source-of-funds checks, transaction monitoring, and escalation workflows that match the risks of the products offered. The SFC’s AML/CFT guideline sets out the standards and the expectation that firms operationalise them.
3) Market integrity, surveillance, and conflicts management
A licensed platform needs credible monitoring for market abuse risks that can arise in high-volatility, always-on markets. That surveillance and management includes restricted tokens, information barriers, staff dealing risks, and the potential misuse of sensitive information. In practice, this pushes firms to treat employee trading and personal account dealing in virtual assets as a conduct risk area.
4) Custody and client asset protection
Hong Kong’s regulators continue to refine supervisory expectations for safe custody of client virtual assets. Firms must show they can protect client assets, manage wallets and key controls, and run safeguarded operational processes.
Hong Kong's Virtual Asset Regime Expansion
Hong Kong has also signalled that licensed platforms may broaden the range of products and services they offer, subject to conditions and supervisory engagement. In November 2025, the SFC issued a circular expanding permitted products and services for SFC-licensed VATPs, including changes to token-related requirements and other operational expectations. This direction reinforces that as product sets expand, so does the potential for conflicts of interest, staff dealing issues, and supervision gaps.
In parallel, the Hong Kong Monetary Authority (HKMA) has implemented a separate licensing regime for fiat-referenced stablecoin issuers. Under the Stablecoins Ordinance, which took effect from 1 August 2025, a licence is required to issue fiat-referenced stablecoins in Hong Kong. While distinct from the VATP licensing regime, it adds another regulated virtual asset activity that firms need to map against existing compliance controls and governance.
The Challenges with Employee Conduct Risk within a VA Context
Virtual asset markets introduce practical supervision issues that firms do not always face in traditional securities dealing:
- 24/7 trading and rapid price moves can make pre-clearance windows and blackout periods harder to design.
- Self-custody wallets and decentralised rails can limit visibility if employees only report exchange accounts but omit wallets and on-chain activity.
- Token proliferation can outpace restricted lists and complicate issuer due diligence and conflicts checks.
- Cross-border access makes it easier for staff to use offshore venues, increasing the need for clear policies, attestations, and monitoring.
Firms will benefit from treating employee personal account dealing in crypto as part of their broader conflicts of interest program, rather than a one-off policy update.
How RegTech Supports a “Policy to Practice” Response
The most effective regulatory technology (RegTech) supports licensing obligations through day-to-day oversight. The MyComplianceOffice (MCO) complete compliance platform helps firms manage employee personal trading in crypto and digital assets using structured workflows that capture holdings, support pre-clearance and approvals, recognise wallets, and generate audit-ready reporting. MCO’s capabilities enable firms to evidence compliance and maintain clear records that demonstrate how the firm actively manages conduct and conflicts of interest risk within both traditional securities and virtual assets capacities.
MCO's Digital Asset Personal Trading solution provides a purpose-built workflow to manage employee personal trading in Digital Assets and Crypto. With Digital Asset Personal Trading, firms can:
- Track digital asset holdings
- Pre-clear trades
- Recognize wallets natively
- Capture an up-to-date asset list
- Integrate with major exchanges and wallets
- Generate detailed, audit-ready reports
- Establish restriction and exemption lists
- Run conflict checks against employee activity using configurable, rules-based logic
MCO's single compliance platform enables firms to manage employee personal trading activities across securities, crypto and digital assets in conjunction with Personal Trade Manager.
MCO’s Know Your Employee Compliance Suite additionally provides firms with a fully integrated solution to monitor, identify and remedy conflicts of interest and code of conduct issues to keep pace with a changing regulatory environment. The platform’s crypto and digital asset trading oversight capabilities fully support assets, transactions and holdings based on crypto and blockchain technology.
Also, see our in-depth crypto regulation compliance article which includes the latest updates across Singapore, Australia, Japan, the United States, United Kingdom, and more.
