1. Background Virtual assets (VA) related activities are subject to regulatory regime under the Securities and Futures Ordinance, Cap. 571 Laws of Hong Kong (SFO) and/or the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap. 615 Laws of Hong Kong (AMLO). The SFO regime applies to activities relating to VA that falls in the definition of “securities” or “futures contracts” under the SFO (Securities VA). The AMLO regime applies to VA not caught by those definitions (Non-securities VA). The SFO regime is more comprehensive, covering dealing, advisory, asset management and custody activities relating to Securities VA. At present, the AMLO regime only covers operating VA exchange but not the other activities relating to Non-securities VA. The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) jointly launched public consultations in June 2025 on proposed changes to the AMLO for establishing a licensing regime for dealing and custodian services relating to Non-securities VA. Consultation conclusions were published on 24 December 2025, along with the launch of further public consultation on proposed changes to the AMLO for establishing the licensing regime for advisory and management services relating to Non-securities VA.11 The target is to introduce a bill to the Legislative Council in 2026. 2. Key takeaways Alignment of AMLO regime and SFO regime The expanded licensing regime for Non-securities VA will align with the licensing regime for Securities VA. Both regimes adopt an activity-based approach. This demonstrates the regulatory philosophy and policy of “same activity, same risks, same regulation” principle. Under the SFO, Type 122 licence is required for dealing, Type 433 licence is required for advisory, Type 944 licence is required for portfolio management, and Type 1355 licence is required for custodian services relating to Securities VA. Corresponding licence types are now expected to be established under the AMLO for Non-securities VA. No transition or deeming arrangements The FSTB and SFC do not plan to provide transition or deeming arrangements to existing Non-securities VA service providers. This is intended to offer optimal investor protection and avoid creating confusion over licensing status. Accordingly, the licensing regime will take full effect on commencement date(s) to be designated in due course. To alleviate practical difficulties arising from a “hard” commencement date, the Government and the SFC will take into account the time that market participants need to adjust their business models in deciding the appropriate commencement date(s). Existing service providers are strongly encouraged to initiate pre-application processes and early engagement with the SFC or (where the service provider is an authorized institution under the Banking Ordinance, Cap. 155 Laws of Hong Kong) the HKMA. Expedited licensing and registration process for existing regulated entities For entities licensed by the SFC under the present regulatory regime for VA-related activities and already engaged in the relevant licensed activities, the SFC will introduce an expedited licensing and registration process for them under the expanded AMLO regime. Advancing market access and regulatory clarity Under Pillar A (Access) of its ASPIRe roadmap66, the SFC aims to integrate Hong Kong with global liquidity to foster the continued growth of Hong Kong’s digital asset ecosystem and advance Hong Kong as a global hub for innovation. The enhanced VA regulatory framework offers comprehensive, integrated regulation across the full VA value chain and regulatory clarity. 3. High-level summary of proposed licensing requirements and criteria (i) VA dealing What amounts to dealing in Non-securities VA? The proposed scope aligns with Type 1 licence for dealing in Securities VA under the SFO regime and covers: Any person, by way of business, making or offering to make an agreement with another person, or Inducing or attempting to induce another person to enter into or offer to enter into an agreement, with a view to acquiring, disposing of, subscribing for or underwriting VAs. Activities within scope may include payment service providers offering to buy or sell Non-securities VA to facilitate transactions, margin trading in Non-securities VA, Non-securities VA staking, Non-securities VA borrowing and lending, and possibly peer-to-peer transactions, or provision of decentralised or technological services if the activities fall within the scope of the licensing requirements having regard to their nature and substance. Exemptions Exemptions being considered by the FSTB and SFC include: transactions conducted through SFC-regulated VA dealers, transactions conducted as principal, intra-group transactions, use of Non-securities VA by purchasers of goods/services as payment for goods/services and stablecoin activities conducted by HKMA-licensed stablecoin issuers, as well as activities relating to Non-securities VA generated as rewards for ledger maintenance, or minted through SFC-regulated intermediaries. (ii) VA custodian What amounts to custody services for Non-securities VA? The proposed scope aligns with the relevant scope of Type 13 licence for providing depositary services for relevant collective investment schemes under the SFO regime and covers: Custodians which, by way of business, safekeep private keys or similar instruments enabling the transfer of Non-securities VA Entities within scope may include associated entities of SFC-licensed VATPs, entities holding Type 13 licence under the SFO, and entities holding Type 9 licence under the SFO – if they provide VA custodian services by way of safekeeping the private keys (or similar instruments). Exemptions Exemptions being considered by the FSTB and SFC include top-layer trustees or fund managers delegating Non-securities VA custody to third-party custodians and HKMA-licensed stablecoin issuers only providing custody of stablecoins issued by them to clients. Pending publication of the legislative bill setting out details of amendments to the AMLO, below is a high-level summary of some potential eligibility requirements and minimum criteria for obtaining licences for conducting Non-securities VA activities under the expanded AMLO regime. VA dealing VA custodian Corporation An applicant must either be: (i) a locally incorporated company with a permanent place of business in Hong Kong, or (ii) a company incorporated elsewhere but registered in Hong Kong under the Companies Ordinance, Cap. 622 Laws of Hong Kong Same as dealer Financial resources Except for banks which are subject to HKMA’s capital requirements, a dealer should have adequate financial resources for operating its Non-securities VA business. These include minimum paid-up share capital of HK$5 million and a minimum required liquid capital of up to HK$3 million (depending on business model). The SFC will also retain flexibility to impose additional financial resources requirements where necessary (e.g. excess liquid capital equivalent to at least 12 months of its actual operating expenses) Except for banks which are subject to HKMA’s capital requirements, a custodian should have adequate financial resources for operating its Non-securities VA business. These include baseline financial resources of a minimum paid-up share capital of HK$10 million and a minimum required liquid capital up to HK$3 million (depending on the business model). The SFC will also retain flexibility to impose additional financial resources requirements where necessary (e.g. additional requirements calibrated with reference to scale of business) Fit and proper tests The applicant, its substantial shareholders, ultimate owners, directors and personnel carrying out the dealing functions are required to satisfy the fit and proper tests prescribed by the SFC Same as dealer Responsible officers At least two responsible officers approved by the SFC or two executive officers approved by the HKMA (as the case may be) to be generally responsible for ensuring compliance with anti-money laundering/counter-financing of terrorism requirements and other regulatory requirements, and be held personally accountable in case of non-compliance Same as dealer Knowledge, experience and risk management A dealer is required to have proper corporate governance structure with suitable personnel having necessary knowledge and experience to discharge their responsibilities effectively, and to put in place appropriate risk management policies and procedures for managing money laundering/terrorist financing and other risks Same as dealer Conduct of business A dealer is required to act honestly, fairly, with due skill, care and diligence, in the best interests of its clients and integrity of the market, as well as comply with all statutory and regulatory requirements applicable to the conduct of its business activities Same as dealer Financial reporting and disclosure A dealer should observe prescribed auditing and disclosure requirements and submit audited accounts Same as dealer Record keeping A dealer is required to maintain proper records in relation to its business activities, with the SFC/HKMA having right of access as part of the regulator’s ongoing supervision Same as dealer Investor protection A dealer should put in place measures to ensure investor protection and suitability of its services and products, such as client VA knowledge assessment, client risk assessment and risk profiling, and prevent and disclose actual or potential conflicts of interest The SFC is still formulating regulatory requirements for mitigating the risks associated with VA custodian services. The SFC will build upon the regulations established for VATPs and use the VATP Guidelines77 (particularly Chapter X on Custody of Client Assets) as baseline reference. The SFC will also actively engage the industry as part of its early engagement process in setting regulatory requirements Use of SFC-regulated custodians In the early stage, the SFC will require a dealer to custody client Non-securities VA with SFC-regulated VA custodian service providers to ensure proper asset segregation and reduce insolvency, fraud and cyberattack risks N/A Information and notification A dealer will be required to submit a wide range of information (for example, details in respect of wallet addresses used in the course of business, scope and nature of business, types of services offered to clients) Same as dealer   4. Further consultations on Non-securities VA advisory and management Further consultation by the FSTB and SFC on establishing the licensing regime for advisory and management services relating to Non-securities VA is scheduled to end on 23 January 2026. (i) VA advisory What amounts to advising on Non-securities VA? The proposed scope aligns with Type 4 licence for advising on Securities VA under the SFO regime and covers: Giving advice on whether, which, the time at which, or the terms or conditions on which Non-securities VA should be acquired or disposed of, or issuing analyses or reports to facilitate such decisions Other proposals Financial resources: Minimum paid-up share capital of HK$5 million; and minimum required liquid capital of HK$100,000 (for not holding client assets) or HK$3 million (in any other case) Exemptions: Similar exemptions to Type 4 licence under the SFO regime. These may include solely advising wholly-owned group companies, acts wholly incidental to licensed VA dealing or VA fund management, advice of solicitors/counsels/CPAs wholly incidental to their professional practice, acts wholly incidental to registered trust companies’ discharge of duties, etc. (ii) VA management What amounts to managing Non-securities VA? The proposed scope aligns with Type 9 licence for portfolio management of Securities VA under the SFO regime and covers: Providing a service of managing a portfolio of Non-securities VA for another person Other proposals Financial resources: Minimum paid-up share capital of HK$5 million; and minimum required liquid capital of HK$100,000 (not holding client assets) or HK$3 million (in any other case) Custody requirements: The SFC is considering whether VA management service providers should safekeep the Non-securities VA of private funds they manage only with SFC-regulated VA custodians, or whether they should have the flexibility to appoint any custodian Exemption: The SFC is considering whether to exempt self-custody by private fund/venture capital fund managers of Non-securities VA up to a limited threshold 5. Further reading FSTB and SFC conclude consultations on virtual asset dealer and custodian regimes, further consult on two new regimes Further Public Consultation on Legislative Proposal to Regulate Virtual Asset Advisory Service Providers and Virtual Asset Management Service Providers Public Consultation on Legislative Proposal to Regulate Dealing in Virtual Assets Consultation Conclusions Legislative Proposal to Regulate Dealing in Virtual Assets and Further Public Consultation Legislative Proposal to Regulate Virtual Asset Advisory Service Providers and Virtual Asset Management Service Providers Public Consultation on Legislative Proposal to Regulate Virtual Asset Custodian Services Consultation Conclusions Legislative Proposal to Regulate Virtual Asset Custodian Services