The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) released their consultation conclusions on regulating Virtual Asset (VA) advisory and management services on 26 May 2026. Operating under the mandate of “same activity, same risk, same regulation,” the SFC is aligning the licensing regime for VA advisors and VA managers under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) with the traditional Type 4 (advising on securities) and Type 9 (asset management) regime under the Securities and Futures Ordinance (SFO).
Following our January 2026 article focusing on the licensing framework for VA dealers and VA custodians, this update completes the regulatory circuit for buy-side firms.
VA Management: Threshold & Custody Breakthroughs
Scope: The SFC has omitted any de minimis threshold. If you operate a business in Hong Kong that manages a portfolio for others and the portfolio contains VA, you will fall in scope.
- The term “VA” under the AMLO excludes “securities” and “futures contracts” as defined in the SFO. Structured products referencing VAs, VA spot exchange traded funds, VA futures ETFs are securities. If your fund/portfolio exclusively holds VA spot ETFs, VA futures ETFs, or structured products referencing VAs, these remain classified as “securities” and managing these assets will continue to fall under your traditional Type 9 licence.
- Whether you need a dedicated VA management licence hinges on discretionary decision-making. Some funds (albeit without VAs as the underlying assets) accept VAs (such as BTC, ETH, or stablecoins) for subscriptions and redemptions, or use VAs instead of fiat for investment and divestment transactions. If you manage these funds and have discretionary authority to allocate or rebalance holdings, convert VAs into cash, or use VAs to purchase other assets within the portfolio, you will need a VA management licence.
Exemptions: Mirroring the traditional SFO framework, where a Type 9 manager does not need a Type 1 license for incidental fund dealing, the SFC will exempt licensed VA managers from needing a VA dealing license, provided their VA trading is solely for the purpose of managing the fund/portfolios (e.g., converting investor VA subscriptions into cash or rebalancing portfolio tokens).
Custody: Unlike the managers for SFC-authorised funds, private fund managers retain the flexibility to appoint qualified global custodians outside of Hong Kong rather than being limited to locally licensed VA custodians, maintaining regulatory parity with their existing custody arrangements. For early-stage or bespoke tokens not supported by institutional custodians, the SFC will permit manager self-custody under highly stringent conditions. However, doing so triggers significantly higher capital requirements and triggers a VA custodian licensing requirement.
Staking: Private funds are allowed to engage in staking aligning with the current regulatory framework for SFC‑authorised funds.
VA Advisory: Beware AI Tools and Finfluencers
Scope: The “VA advisory services” will capture the provision of advice and issuance of reports/analyses on the acquisition or disposal of VAs by way of business, regardless whether the advice or report is provided physically or electronically.
- If you deploy proprietary algorithms, AI tools, or software that generate trading signals or alerts for clients to replicate (akin to copy or mirror trading), this will be deemed a VA advisory service. Given the growing importance of digital channels and the rise of finfluencers, the SFC will conduct a separate review to ensure its licensing regime remains suitable for the evolving market.
- Again, the AMLO definition of “VA” explicitly excludes securities. Therefore, if you are advising on tokenised securities (e.g. tokenised bonds or tokenised fund interests), you remain under the existing scope of Type 4 regulated activities, rather than providing VA advising services.
Exemptions: Standard SFO-style exemptions apply. You do not need a separate advisory licence if the advice is provided purely to your 100% wholly-owned group entities, or if it is strictly incidental to a licensed VA dealing business.
Ongoing Regulatory Requirements
The capital requirements for VA advisors and VA managers are the same as those of the traditional Type 4 and Type 9 licensed corporations, as follows:
| Minimum paid-up capital | Minimum liquid capital | |
|---|---|---|
| VA advisor/manager (not holding client assets) | None | HK$100,000 |
| VA advisor/manager (holding client assets) | HK$5 million | HK$3 million |
The ongoing regulatory requirements for the AMLO-licensed VA advisors and VA managers will be based on the existing VA Advisory Terms and Conditions and VA Management Terms and Conditions currently imposed as licensing conditions on corporations or registered institutions performing those activities. The Joint Circular on Intermediaries’ Virtual Assets-related Activities dated 22 December 2023, as amended by the Supplemental Joint Circular on Intermediaries’ Virtual Asset-related Activities dated 30 September 2025, will continue to apply.
Action Items
The FSTB and the SFC plan to submit a legislative proposal for the VA licensing regime to the Legislative Council in 2026, after which the AMLO will be amended to introduce the new regime.
The SFC is not offering a grandfathering or transitional window for existing players. The relevant VA licence is required when the amended AMLO takes effect. If you are currently managing or advising on VAs, or plan to launch any VA fund or tokenisation projects, you should:
- Assess your asset classes: You should determine whether the assets you advise or manage fall within the SFO’s definition of “securities” or “futures contracts,” or whether they are VAs under the AMLO and are therefore subject to the new VA regulatory framework.
- Plan your custody architecture: If you are utilizing offshore custody or planning self-custody for digital token distributions, you should plan for engaging a qualified custodian or start building your own robust self-custody infrastructure.
- Initiate pre-application engagement: Given the absence of a transitional grace period, you should engage the SFC in the pre-application discussions to avoid any disruption to your VA advisory or VA management service.
