The government of Hong Kong is set to finalize proposals for the regulation of virtual asset dealers and custodians, with plans to introduce these rules to the Legislative Council in 2026. This move follows a two-month public consultation that garnered over 190 responses. The proposed regulations aim to establish a licensing framework for virtual asset services, aligning with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and mirroring the requirements for securities dealing. As part of its efforts to position Hong Kong as a leading crypto hub in Asia, the government is developing a regulatory environment that supports the growth of the crypto industry, differing from China's stricter stance on virtual currencies.
Recent developments include the introduction of new licensing regimes for over-the-counter trading, a review of derivatives and margin trading for virtual assets, and the approval of staking services for licensed exchanges and funds under strict regulations. The proposed custodian regime prioritizes the security of private keys and the protection of client assets, while the dealer rules are aligned with the licensing expectations for securities intermediaries, both of which are components of the SFC's ASPIRe roadmap. Additionally, the SFC has initiated a consultation to extend oversight to virtual asset advisers and managers, adhering to the principle of 'same business, same risks, same rules' and applying standards comparable to those for securities advisory and asset management services, with comments due by January 23.