Hong Kong Crypto Licensing Expands: Sellers and Custodians Face Strict New Mandate

Hong Kong is shifting forward with a serious growth of its crypto regulatory framework after regulators concluded consultations on new licensing regimes for digital asset sellers and custodians, tightening oversight throughout a wider a part of the digital asset market.

The Monetary Providers and the Treasury Bureau and the Securities and Futures Fee mentioned on Dec. 24 that corporations offering digital asset dealing or custody providers in Hong Kong might be required to acquire licenses as soon as the brand new framework takes impact.

New Licensing Plan Brings Crypto Brokers and Custodians Into Oversight

The transfer follows months of session and comes as authorities search to shut regulatory gaps that emerged as crypto exercise unfold past licensed exchanges into over-the-counter buying and selling, brokerage providers, and third-party custody.

Regulators mentioned the proposals acquired broad market assist and can now transfer into the legislative part, marking one other step in constructing a complete digital asset regime beneath the SFC’s ASPIRe roadmap.

In line with the SFC launch, all digital asset sellers might be regulated in a manner that intently mirrors present guidelines for securities sellers.

Notably, the licensing requirement will cowl a variety of actions, together with digital asset-to-fiat and digital asset-to-virtual asset conversions, brokerage providers, block buying and selling, and associated advisory features, whether or not carried out on-line or via bodily shops.

This brings OTC buying and selling and broker-style providers squarely inside regulatory oversight for the primary time.

Additionally, beneath the deliberate framework, custodians can even face a devoted licensing regime targeted on the safekeeping of shopper property. Any entity holding or controlling personal keys for shopper digital property in Hong Kong will should be licensed or registered.

Regulators mentioned the regime is designed to handle dangers round asset safety by requiring strict segregation of shopper property, sturdy inside controls over key administration, enhanced cybersecurity requirements, and strong enterprise continuity planning.

Sellers might be required to position shopper property solely with licensed or registered custodians working in Hong Kong.

Each regimes will impose fit-and-proper necessities on candidates, alongside minimal monetary useful resource thresholds.

Sellers are anticipated to fulfill capital necessities of round HK$5 million, whereas custodians will face larger thresholds, together with HK$10 million in paid-up capital.

Hong Kong’s Crypto Framework Grows to Embody Advisers and Managers

Alongside the supplier and custodian regimes, regulators launched an extra session on extending licensing necessities to digital asset advisory and administration service suppliers.

The proposals would deliver crypto advisers and asset managers beneath the same regulatory construction to their conventional finance counterparts, giving the SFC powers to oversee, examine, and sanction corporations working on this a part of the market.

SFC Chief Government Officer Julia Leung mentioned the expanded framework is meant to assist a safe and aggressive digital asset ecosystem whereas sustaining sturdy investor safety.

Regulators are encouraging corporations within the new regimes to have interaction early with the SFC via pre-application discussions to higher put together for compliance.

The newest step builds on a collection of regulatory developments over the previous 12 months. Hong Kong already requires crypto buying and selling platforms to be licensed, with 11 exchanges authorised to this point beneath a compulsory regime that changed an earlier opt-in framework.

Earlier in 2025, town introduced its Stablecoin Ordinance into pressure, making a licensing regime for stablecoin issuers.

Authorities have additionally taken steps to develop market entry, together with permitting licensed exchanges to hook up with world liquidity swimming pools and easing sure token itemizing necessities.

The proposal, nonetheless topic to session, displays a cautious strategy that distinguishes between regulated stablecoins and extra unstable crypto property.

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