Consultation Conclusions and Further Public Consultation
On December 24, 2025, after considering feedback from the industry and market participants, the Hong Kong Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Securities and Futures Commission (SFC) published their conclusions regarding the legislative proposal to regulate dealing in virtual assets (the Consultation Conclusions). The proposal was set out in a public consultation paper published in June 2025 (the Consultation Paper) and proposed the establishment of a new virtual asset (VA) dealing licence under the legal framework of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615 of the Laws of Hong Kong) (AMLO). The Consultation Conclusions summarize the preliminary regulatory approach and the licensing requirements in relation to VA dealing. The FSTB and the SFC have launched a further public consultations regarding the legislative proposal to introduce separate licensing requirements under the AMLO for VA advisory services and VA management services.
According to the Consultation Conclusions, three new licences for VA-related services will be introduced under the AMLO, covering three major categories: (1) VA dealing, (2) VA advisory and (3) VA management.
Compared to the existing licences for regulated activities under the Securities and Futures Ordinance (Cap.571 of the Laws of Hong Kong) (SFO) for similar businesses, namely Type 1 (dealing in securities), Type 4 (advising on securities), and Type 9 (asset management), which need to be uplifted to cover VA-related business activities, the new VA dealing licence will cover a broader scope of business activities and models than the current uplifted Type 1 licence. Financial institutions currently holding an uplifted Type 1 licence can obtain the new VA dealing licence through an expedited approval process. The SFC suggests that the regulatory requirements to be imposed on the new VA advisory services licence and the VA management services licence, should follow those applicable to the existing uplifted Type 4 and Type 9 licences. Financial institutions that currently hold the uplifted Type 4 and Type 9 licences may also obtain the new VA advisory services licence and the VA management services licence, through an expedited approval process.
In the following sections, we provide a detailed analysis of the regulatory requirements outlined in the Consultation Conclusions for the three new licences, under the legal framework of the AMLO.
First Licence: VA Dealing Licence
Content and Interpretation of the Consultation Conclusions
Scope and Coverage
VA has the same definition under the AMLO and excludes securities or futures contracts as defined under the SFO.
VA Dealing Services include:
- simple dealing services, such as conversions between different VAs or between VA and fiat currency
- more complex dealing services, such as VA brokerage activities
- are irrespective of whether the services are to be provided through different channels (e.g., physical outlets or online platforms)
- While VA margin trading, VA staking and VA borrowing and lending will fall within the scope, the SFC will consider whether to permit licensed institutions to provide such services
VA Dealing Services may include:
- peer-to-peer transactions, or the provision of decentralized or technological services
- it depends on the substance of the service
VA Dealing Services exclude:
- activities in derivatives and structured products referencing VA (which remain subject to the licensing requirements for regulated activities under the SFO, including Type 1 (dealing in securities), Type 2 (dealing in futures contracts), and Type 11 (dealing in OTC derivative products or advising on OTC derivative products))
- those services that deal solely in tokenised securities
We understand that the types of dealing services covered by VA Dealing Services and the scope of the service providers are broader than those currently captured under the uplifted Type 1 licence commonly observed in the market. As a result, typical VA exchange shops and platforms offering VA-fiat OTC conversion services will also need to apply for this licence. This expansion will bring a wider range of service providers within the SFC’s regulatory perimeter, thereby enhancing investor protection.
It is noteworthy that VA Dealing Services excludes services related to traditional securities (including structured products and derivatives) and futures contracts, thereby avoiding overlapping with the existing licensing regime under the SFO. Financial institutions providing services related to such products will continue to be regulated by the relevant licensing requirements under the SFO.
Exemptions
Exemptions from the Requirement to Hold a VA Dealing Licence:
- transactions conducted through SFC-regulated VA dealers
- transactions conducted as principal (for one’s own account)
- intra-group transactions
- the use of VAs by a purchaser of goods or users of services as a means of payment for such goods or services
- SFC-regulated VA managers which deal solely for the purpose of providing VA management services for which it is licensed or registered (this is similar to the licensing exemption for conducting Type 1 regulated activities when holding a Type 9 licence)
- stablecoin issuers licensed by the Hong Kong Monetary Authority (HKMA) and conducting regulated stablecoin activities
Potential exemptions from the requirement to hold a VA Dealing Licence:
- distribution of VAs generated as rewards for ledger maintenance or transaction validation (e.g., the distribution of staking rewards)
- activities by VA issuers regarding VAs created or minted by them, if conducted through SFC-regulated intermediaries or offered exclusively to professional investors
The exemptions applicable to the VA Dealing Licence broadly mirror those applicable to the Type 1 licence under the SFO, so as to avoid an increase in compliance and operational costs for businesses in which no ‘dealing on behalf of others’ is involved and preventing the unnecessary duplication of the regulatory requirements.
Execution Platform
Considering that VA trading is borderless by nature and that a more flexible approach could create greater room for the development of Hong Kong’s VA market, the SFC is considering whether VA trades should be allowed to be executed on platforms other than SFC-licensed VA trading platforms (VATPs). This approach is intended to strike a balance between investor protection and market development.
Financial institutions holding an uplifted Type 1 licence are currently only permitted to execute clients’ trades through SFC-licensed exchanges. If the SFC allows holders of the VA Dealing Licence to execute VA trades on exchanges other than those licensed by the SFC, service costs will be reduced and the competitiveness of these services will be enhanced, thereby attracting more investors to utilize such services. However, it is essential to consider the credibility and compliance records of such exchanges, to avoid any potential threats to the security of client assets.
Custodian
In the initial stage of the regime, the SFC will require VA dealers to place client VAs with SFC-regulated VA custodian service providers. This is to ensure proper client asset segregation and reduce risks such as insolvency, fraud, cyberattacks and other threats. However, the SFC has indicated that it will consider adjusting custody requirements in the future based on the variety of business models.
No Transitional Arrangement
To safeguard investor rights and avoid regulatory uncertainty, the VA Dealing Licence regime will not include a transitional period or a deeming arrangement to existing VA dealing service providers. The licensing regime will take full effect on the commencement date of the statutory provisions. However, when determining an appropriate commencement date, the SFC will take into account the time required for affected institutions to adjust their business models. It is recommended that industry stakeholders already engaged in VA dealing services (including those holding an uplifted Type 1 licence) contact the SFC and initiate pre-application communication as early as possible, in order to understand the licensing processes and requirements, and avoid undue business disruptions arising from a failure to obtain a VA Dealing Licence in a timely manner.
Expedited Approval Process
For SFC-licensed VATPs as well as licensed corporations and registered institutions currently providing VA dealing services under an uplifted Type 1 licence, the SFC will introduce an expedited approval process and will be in touch with these entities regarding the application procedures.
Second Licence: The Proposed VA Advisory Licence
Content and Interpretation of the Consultation Conclusions
Scope and Coverage
Regarding the definition of ‘advising on securities’ under the SFO, ‘advising on VA’ refers to:
- giving specific advice on whether; which; the time at which; or the terms or conditions on which, VAs should be acquired or disposed of; or
- issuing analyses or reports, to facilitate the recipients of said analyses or reports to form a view on the aforementioned VA dealing decisions.
We note that some market participants providing advice solely on VAs may not necessarily hold an uplifted Type 4 licence, as their activities fall outside the scope of the traditional Type 4 regulated activity of ‘advising on securities’. Under the proposed VA Advisory Licence regime, such institutions would be required to obtain the VA Advisory Licence.
Exemptions
In reference to the exemptions applicable to the Type 4 licence under the SFO, the following activities are exempt from the requirement to hold a VA Advisory Licence:
- solely advising wholly-owned group companies
- acts performed incidental to licensed VA dealing
- acts performed solely for the purpose of licensed VA fund management
- solicitors, counsels and certified public accountants for acts incidental to their professional practice
- acts performed incidental to a registered trust company’s discharge of duty
- acts conducted through a general available publication or broadcast
Regulatory Requirements
- Broadly follow the requirements applicable to the uplifted Type 4 licence (i.e., the content in Part II of Appendix 6 to the Joint Circular on Intermediaries’ VA-Related Activities (Joint Circular) issued by the SFC and the HKMA on December 22, 2023).
- To observe the anti-money laundering and counter-terrorist financing (AML/CFT) requirements stipulated in Schedule 2 to the AMLO, relating to CDD and record-keeping.
- Other requirements are expected to include those on knowledge and experience (such as having passed a test on regulatory knowledge), risk management, financial reporting and disclosure, conduct and business, information and notifications and record keeping. They are also expected to include investor protection safeguards such as the need to assess clients’ VA knowledge, to provide clients with adequate training, to conduct client risk assessments and risk profiling, to ensure clients’ suitability and to prevent, avoid and disclose any actual or potential conflicts of interest.
No Transitional Arrangements
The SFC proposes that the VA Advisory Licence regime will not include a transitional period or a deeming arrangement to pre-existing VA advisory service providers.
It is recommended that industry stakeholders already engaged in VA advisory services (including those holding an uplifted Type 4 licence) contact the SFC and initiate pre-application communication as early as possible, in order to understand the licensing process and requirements, and avoid undue interruptions to their business operations that may result from not obtaining the VA Advisory Licence in a timely manner.
Expedited Approval Process
For financial institutions holding an uplifted Type 4 licence, the SFC may introduce an expedited approval process.
Third Licence: Proposed VA Management Licence
Content and Interpretation of the Consultation Conclusions
Scope and Coverage
VA Management is understood to mean managing a portfolio containing VAs (such as VA funds) for another person.
Given the inherent risks of investing in VAs, the SFC proposes not to set a de minimis threshold (e.g., a stated investment objective or an intention to invest 10% or more of the gross asset value of a portfolio in VAs). This means that any entity which provides asset management services for a portfolio that invests in VAs, regardless of the amount of VAs involved, will need to obtain a licence or registration. This approach prevents entities from structuring activities to circumvent regulations by staying just below a limit.
Under the current regulations in relation to a Type 9 licence, if a manager invests less than 10% of the total portfolio value in VAs, it only needs to notify the SFC of such activities and does not require a licence uplift. Under the proposed new VA Management Licence regime, such managers would also be required to obtain a VA Management Licence.
We note that some managers in the market who invest 100% of assets in VAs may not necessarily hold a Type 9 licence, as their activities do not fall within the scope of the traditional Type 9 regulated activity of managing securities portfolios. Under the proposed new VA Management Licence regime, such managers would be required to obtain a VA Management Licence.
Regulatory Requirements
- These follow the requirements applicable to the uplifted Type 9 licence (i.e., the content in Appendix 7 to the Joint Circular).
- To observe the AML/CFT requirements stipulated in Schedule 2 to the AMLO relating to CDD and record-keeping.
Custody Arrangements
- The SFC is considering whether VA management service providers should only safekeep the VAs of the private funds they manage with SFC-regulated VA custodian service providers, or whether they should have the flexibility to use other types of custodians or alternative custody arrangements.
- For new tokens invested in by private equity or venture capital fund managers, the SFC will also consider allowing self-custody up to a limited threshold and without the need to obtain a VA custodian service provider licence or registration.
No Transitional Arrangements
The SFC proposes that the VA Management Licence regime will not include a transitional period or a deeming arrangement to pre-existing VA management service providers.
It is recommended that industry stakeholders that are already engaged in VA management services (including those holding an uplifted Type 9 licence) contact the SFC and initiate pre-application communication as early as possible, in order to understand the licensing procedures and requirements, and avoid potential adverse impacts on their operation due to failure to obtain the licence in a timely manner.
Expedited Approval Process
For financial institutions holding an uplifted Type 9 licence, the SFC may provide an expedited approval process.
Next Step
The FSTB and the SFC will finalize legislative proposals based on the Consultation Conclusions in response to feedback from the public consultation. The legislative proposals will provide for the establishment, under the AMLO, of separate licensing regimes applicable to: (1) VA dealing service providers, (2) VA advisory service providers, and (3) VA management service providers. It is expected that the bill will be introduced into the Legislative Council for scrutiny in 2026.
Conclusion
Under the Virtual Asset Service Provider (VASP) licensing regime under the AMLO, which took effect on June 1, 2023, and the Type 1 and Type 7 regulated activity licensing regimes under the SFO, VATPs licensed by the SFC that hold VASP, Type 1, and Type 7 licences (collectively referred to as Exchange Licences) are permitted to provide VA dealing services to clients. These VA dealing services under the Exchange Licenses are not limited to on-platform trades executed through a matching engine but have also been extended to include OTC dealing services.
Apart from Exchange Licences, other financial institutions providing VA dealing, VA advisory or VA management services are currently regulated by the SFC under the SFO’s Type 1 (dealing in securities), Type 4 (advising on securities), and Type 9 (asset management) regulated activity licences, which require corresponding uplifts to cover VA-related activities. However, the existing licensing regime under the SFO does not adequately capture the growing market demand for VA OTC trading services, and the service models available to licensed financial institutions are relatively limited (e.g., institutions holding an uplifted Type 1 licence can only provide VA dealing services to clients through SFC-licensed exchanges). Additionally, some entities that provide advisory or management services solely in relation to VAs (without involving securities) may fall outside the SFC’s regulatory perimeter, as their business does not involve traditional securities.
In light of the evolving market environment, the need to ensure adequate investor protection, and to promote the healthy development of Hong Kong’s VA industry, the FSTB and the SFC published the Consultation Paper in June 2025. The Consultation Paper proposed bringing a broader range of VA-related activities, including VA OTC trading, into the regulatory scope and establishing a dedicated VA dealing licensing regime. On December 24, 2025, the Consultation Conclusions and the public consultation were released, with the public consultation recommending the introduction of dedicated licensing regimes for VA advisory and VA management services.
The introduction of new licensing regimes under the AMLO covering the three major categories of services, namely (1) VA dealing, (2) VA advisory, and (3) VA management, will further enhance Hong Kong’s regulatory framework for VA-related services. The licensing regimes clarify the regulatory responsibilities and their scope, and through stringent qualification, risk control and ongoing compliance requirements, ensure that institutions fulfill their obligations including safeguarding investor’s assets and complying with the AML/CFT requirements. These three new licensing regimes will operate independently of the SFO regimes applicable to traditional securities and futures contracts related services. They will bring service providers that exclusively provide VA-related services under regulatory oversight, which better aligns with the development of the VA industry.
As the SFC further refines the legislative framework, consults with industry stakeholders and optimizes approval processes, Hong Kong is expected to establish a transparent and robust regulatory regime for VA-related services. This will reinforce Hong Kong’s position as an international hub for virtual assets, and provide stronger institutional safeguards for investor confidence and sustainable market development.
JunHe’s Virtual Asset and Web3 Team
We closely monitor the global regulatory developments relating to blockchain and virtual assets, and we possess extensive legal expertise and experience in the area. We have advised a number of institutional clients on their virtual asset-related businesses in Hong Kong, including applications for VASP licences, Type 1 licence uplifts, Type 4 licence uplifts, Type 9 licence uplifts, and HKMA stablecoin issuer licences, and we have a strong track record of successful applications. We have also provided legal advice to many Web3 startups and financial institutions for the commencement of their virtual asset-related projects in Hong Kong.
We advise institutions that are currently engaged in or planning to engage in virtual asset dealing services, virtual assets advisory services or virtual asset management services, to pay very close attention to the compliance implications of their virtual assets-related business activities, and to proactively prepare for licence applications and the implementation of appropriate compliance and risk control measures. Should you have any inquiries regarding regulatory compliance for conducting virtual asset-related business in Hong Kong, please feel free to contact us.
For further information, please contact:
ZHOU, Ting (Kenneth), Partner, JunHe
Zhou_Kenneth@junhe.com
We have published the following articles in Chinese on compliance requirements for stablecoin and virtual asset-related activities, which you may find of interest:
(1) For insights on the consultation paper on virtual asset custody services issued by the FSTB and the SFC, please refer to our earlier article titled「香港将针对虚拟资产托管服务建立监管制度」.
(2) For an analysis of the SFC’s circular on staking services provided by virtual asset trading platforms, please refer to our earlier articles titled「香港开放虚拟资产质押（Staking）（上篇）：深度解析香港证监会《有关虚拟资产交易平台提供质押服务的通函》」and「香港开放虚拟资产质押（Staking）（下篇）：一文读懂香港证监会《有关中介人虚拟资产相关活动的补充联合通函》」.
(3) For the Consultation Paper on Proposed Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Requirements for Regulated Stablecoin Activities and the Draft Guideline on the Supervision of Licensed Stablecoin Issuers issued by the HKMA to provide regulatory guidance for stablecoin issuers, please refer to our earlier articles titled「香港稳定币时代正式启航 —— 上篇：《稳定币条例草案》通过开启新篇章」and「香港稳定币时代正式启航 —— 下篇： 金管局指引咨询解密 – 发行人及分销商需知要点」.
(4) For the consultation paper issued by the HKMA on implementing the regulatory standards promulgated by the Basel Committee on Banking Supervision (BCBS) in relation to banks’ crypto asset exposures in Hong Kong, please refer to our earlier article titled「香港将实施有关银行持有RWA, 稳定币及比特币等加密资产的监管标准」.
(5) For the key points in the Guiding and Establishing National Innovation for U.S. Stablecoins Act in the United States, please refer to our earlier article titled「美国《GENIUS法案》 揭幕： 美元稳定币引领全球金融新篇章」.
(6) For the core content of the Stablecoin Bill published by the Hong Kong Government and key points of the licence application, please refer to our earlier article titled「香港稳定币时代加速到来 —— 香港 《稳定币条例草案》立法全速推进」.
(7) For the Digital Bond Grant Scheme launched by the HKMA, please refer to our earlier article titled「香港金融管理局推出“数码债券资助计划”」.
(8) For the Consultation Conclusions for Legislative Proposals to Implement a Regulatory Regime for Stablecoin Issuers in Hong Kong and the Sandbox arrangements introduced by the HKMA, please refer to our earlier article titled「一文读懂香港稳定币发行人牌照制度」.
(9) For the Legislative Proposal to Implement the Regulatory Regime for Stablecoin Issuers in Hong Kong and the Sandbox arrangements introduced by the HKMA, please refer to our earlier article titled「稳定币发行人可以开始申请加入香港金管局沙盒（Sandbox）安排」.
(10) For the conclusions drawn from the public consultation conducted by the HKMA on the regulation of stablecoin business, please refer to our earlier article titled「香港金管局拟就经营稳定币业务设立强制性发牌制度」.
(11) For details regarding the Public Consultation on Legislative Proposals to Regulate Over-the-Counter Trading of Virtual Assets issued by the FSTB on 8 February 2024, please refer to our earlier article titled「香港OTC立法咨询 – 为虚拟资产交易监管填补空白」.
(12) For the two circulars related to Tokenised Securities issued by the SFC on 2 November 2023, please refer to our earlier article titled「代币化证券（Tokenised Securities）：香港金融市场新趋势」,
(13) For the Joint Circular on Intermediaries’ Virtual Asset-Related Activities issued by SFC and HKMA on 20 October 2023，please refer to our earlier article titled「金融机构在香港提供虚拟资产相关活动（包括代币化证券业务）的最新监管导向」.
(14) For a brief introduction to licensing in Hong Kong’s FinTech and Web3 industry, please refer to our earlier article titled「香港金融科技及Web3领域相关牌照简介 – 一文读懂香港信托或公司服务提供者（TCSP）、储值支付工具(SVF)及金钱服务经营者(MSO)牌照」.
(15) For the latest regulatory developments on stablecoins in the United States, Singapore and Hong Kong, please refer to our earlier article titled「浅谈全球稳定币监管（二）：美国、新加坡、香港稳定币立法趋势比较」.
(16) For details regarding the Consultation Paper on the Proposed Regulatory Requirements for Virtual Asset Trading Platform Operators Licensed by the Securities and Futures Commission issued by the SFC on 20 February 2023, please refer to our earlier article titled「香港证监会就虚拟资产交易平台牌照（1、7号牌照及VASP牌照）申请要求展开咨询」.
(17) For details regarding the Policy Statement on Development of Virtual Assets in Hong Kong, issued by the Hong Kong Special Administrative Region Government on 31 October 2022, please refer to our earlier article titled「确保Web3创新发生在香港 – 香港就推动建设虚拟资产中心发布政策宣言」.
(18) For the SFC’s regulatory regime for VASPs, please refer to our earlier article titled「香港将针对虚拟资产服务提供商建立发牌制度」.
(19) For an interpretation on the United States crypto assets act, please refer to our earlier article titled「美国Lummis-Gillibrand 加密资产法案要点解析」.
(20) For an overview of the regulatory landscape for stablecoins across major countries and regions worldwide, please refer to our earlier article titled「浅谈全球稳定币监管」.
