Published: December 25, 2025
Hong Kong financial authorities have confirmed plans to introduce mandatory licensing for virtual asset dealers and custodians, expanding the city’s regulatory framework beyond trading platforms and stablecoins. Announced on December 24, 2025, this development follows public consultations and aims to enhance investor protection while solidifying Hong Kong’s position as a leading digital asset center.
Overview of the New Licensing Regimes
The Securities and Futures Commission (SFC) and Financial Services and the Treasury Bureau (FSTB) concluded consultations, receiving broad industry support. Key features include:
- Dealers aligned with traditional securities brokerage rules (similar to Type 1 activities).
- Custodians focused on secure private key management, asset segregation, and cybersecurity.
- Capital requirements: Dealers ~HK$5 million; Custodians HK$10 million paid-up plus liquid capital.
- Client assets for dealers must be held with licensed Hong Kong custodians.
Legislation is expected in 2026, building on existing VATP (11 licensed platforms) and stablecoin regimes.
Key Requirements for Dealers and Custodians
The frameworks emphasize risk-based oversight:
- Fit-and-proper tests for responsible officers and entities.
- Robust AML/CTF compliance under existing ordinances.
- Operational safeguards: Internal controls, business continuity, and client disclosures.
- Exemptions or tailored rules for certain models (e.g., banks, SVF licensees).
Early engagement with SFC encouraged for preparation.
Separate Consultation on Advisory and Management Services
Concurrent with the conclusions, a new consultation launched on licensing virtual asset advisory and fund management providers, closing January 23, 2026. This would mirror traditional finance rules, further integrating crypto into the mainstream ecosystem.
Implications for Hong Kong’s Crypto Ecosystem
This expansion addresses gaps in oversight for OTC trading, brokerage, and custody—common in the sector. Benefits include:
- Greater investor confidence through standardized protections.
- Attracting legitimate firms with clear rules.
- Supporting tokenization and innovation pilots.
- Aligning with global standards while fostering growth.
Challenges may arise for smaller operators meeting capital and compliance thresholds.
Outlook: Toward a Comprehensive Framework
Hong Kong continues evolving its “same risk, same regulation” approach, positioning itself as a trusted hub. With stablecoin rules active since August 2025 and these new regimes upcoming, the city balances innovation with robust safeguards.
Conclusion
The confirmation of licensing for crypto dealers and custodians marks a significant milestone in Hong Kong’s digital asset strategy. As legislation advances in 2026, industry participants should prepare for enhanced standards that promise greater maturity and appeal.
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Disclaimer: This article is for informational purposes only and does not constitute legal or investment advice. Consult official sources and professionals for compliance matters.
