Written by: Xinmei Shen, SCMP

Translated by: Techub News

Hong Kong's regulatory framework for the digital asset industry has now been officially established. The public consultation process for the new licensing system for virtual asset advisory and management service providers has been completed.

This development marks a milestone step for Hong Kong in its efforts to build a global cryptocurrency hub. The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) stated on Tuesday that the draft regulations have received broad support from the market. The relevant rules will be submitted for review by the Legislative Council later this year.

Regulators launched a month-long public consultation last December. This consultation designed new regulatory rules based on the current framework of the traditional securities market.

SFC Chief Executive Ashley Alder stated that the conclusion of this consultation marks "the final stage in the construction of the digital asset regulatory framework."

Under the new regulations, companies providing advice or market analysis on virtual asset trading must meet stringent capital requirements. Companies that do not hold customer assets must maintain a minimum liquidity level of HK$100,000 (approximately US$12,762). Other companies must hold a minimum of HK$5 million in paid-up capital and HK$3 million in liquidity.

SFC Chief Executive Ashley Alder attended the Bond Connect anniversary forum held on July 8, 2025, in Central Hong Kong, image source: Jonathan Wong

Consultation and management companies must also comply with Know Your Customer (KYC) agreements, conduct virtual asset knowledge assessments for clients, and adhere to marketing restrictions regarding the Hong Kong public.

Previously, Hong Kong had established a licensing system for centralized cryptocurrency exchanges and stablecoins and completed regulatory consultations on custodial service providers and virtual asset trading service providers (formerly known as over-the-counter trading) in December.

Andrew Fei, a partner at King & Wood Mallesons in Hong Kong, stated that the conclusion of the latest public consultation marks the completion of the "final piece of the puzzle" in policymaking for Hong Kong's virtual asset ecosystem.

Regulators stated on Tuesday that the new system will be incorporated into the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.

This latest regulatory enhancement by Hong Kong comes as it seeks to establish itself as a global competitive center for digital asset businesses. Hong Kong officials are increasingly demonstrating ambitions to enhance their global influence, often contrasting the certainty of Hong Kong's regulatory environment with the fragmented political landscape in the United States.

The delay of the major cryptocurrency market bill in the U.S., the "Clarity Act," along with the upcoming midterm elections, has introduced uncertainty into the industry, whereas Hong Kong offers a "steady progress" regulatory framework, as remarked by local lawmaker Charles Mok at an industry conference held in Hong Kong last month.

Earlier this month, the "Clarity Act" passed through the Senate Banking Committee and is currently being submitted to the full Senate for a vote, ending a long stalemate and regaining momentum. According to the committee, the bill aims to protect consumer rights while ensuring that innovation remains in the United States.

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