Name
Global FinTech Guide
Country _ Name
Hong Kong
SectionTitle
DLT and cryptocurrencies
Body
FinTechs belonging to this category offer financial services using crypto currencies. This category also includes FinTechs utilising blockchain and distributed ledger technologies (DLT) upon which Bitcoin and Ethereum are based, among others. FinTechs develop and do research in this field in order to create new services – e.g. crypto currency exchange markets, wallet providers, NFTs-related services, new payment services, "smart contracts" or new clearing and settling services.

Introduction

Attitude of the country towards financial services using crypto currencies

Crypto currencies, or VAs, are increasingly seen as an alternative investment product or asset class, and Hong Kong has moved from monitoring VAs trends to actively seeking to regulate VA-related activities.
Valued at over US$3 trillion in 2024 with annual trading volumes exceeding US$70 trillion, the international VA market is a revolutionary influence on the global financial system. The Hong Kong government made a policy statement on the development of VAs in Hong Kong (the 'Policy 1.0') during Fintech Week 2022 that it is intended for Hong Kong to be Asia Pacific's VA hub, and there has since been a lot of positive news for Web3 and the Crypto industry in Hong Kong since then, including new regulatory frameworks in relation to VAs. Later in July 2023 Hong Kong established the Task Force on Promoting Web3 Development, for a term of two years, comprising of 15 non-official members from relevant market sectors, with participation of key government officials and financial regulators. 

As the swift development of VAs requires a proactive and forward-thinking regulatory approach, SFC published the 'A-S-P-I-Re' Roadmap in February 2025, deploying a five-pillar framework (Access, Safeguards, Products, Infrastructure and Relationships), which sets out the following 12 initiatives, engineered to operate collaboratively to bolster the security, innovation, and growth of Hong Kong’s VA market: (1) establishing licensing regimes for VA OTC trading and custody services; (2) attracting major global VA platforms, order flows and institutional-grade liquidity providers to Hong Kong; (3) exploring a more flexible approach to custody technologies and hot/cold storage ratios; (4) enhancing insurance and compensation frameworks; (5) providing further guidance on investor onboarding processes and product categorization; (6) exploring a regulatory framework for professional investor-exclusive new token listings and VA derivative trading; (7) exploring margin financing requirements aligned with risk management protocols in the traditional securities market; (8) considering to allow the provision of staking and borrowing/lending services within the regulated ecosystem; (9) considering solutions for efficient regulatory reporting and deploying advanced surveillance tools to detect illicit activities; (10) better local cross-agency collaboration and cross-border cooperation with global regulators; (11) considering a regulatory framework for financial influencers; and (12) cultivating a sustainable communication and talent network with industry stakeholders.

Following the release of the 'A-S-P-I-Re' roadmap, the Hong Kong government published the 'Policy Statement 2.0 on the Development of Digital Assets in Hong Kong' (the '
Policy 2.0'), which outlines the next phase of development, focusing on strategic measures to enhance VA trading liquidity, diversify VA product offerings, and strengthen Hong Kong’s position as a global VA hub. The strategic initiatives under the Policy 2,0 are structured under the 'LEAP' framework — 'L'egal and regulatory streamlining, 'E'xpanding the suite of tokenised products, 'A'dvancing use cases and cross-sectoral collaboration, and 'P'eople and partnership development — to deliver a VA ecosystem that integrates with both the real economy and financial markets for sustainable growth.

Enforcement actions have also been taken where activities are seen to be in breach of Hong Kong's laws. For example, in 2018, Black Cell Technology Limited halted its initial coin offering ('ICO') and agreed to unwind transactions for Hong Kong investors following the SFC's concerns that the ICO may have constituted a collective investment scheme. Since January 2020, the SFC has published the names of suspicious VA trading platforms in its public Alert List of entities which have come to the attention of the SFC because they are unlicensed in Hong Kong and are believed to be, or to have been, targeting Hong Kong investors or claim to have an association with Hong Kong. There were also a number of fraud cases concerning VAs (such as JPEX), which also involved the arresting of more than 70 people by the Hong Kong police. There is enforcement action in March 2025 against the financial influencers (Finfluencers). Mr. Wong Ming Chung, also known as Franky Wong, had his SFC license suspended following his criminal conviction for providing investment advice on a subscription-based chat group on Telegram he operated in his personal capacity and hosted without license.


Legal affairs

Obligations and requirements to provide financial services using crypto currencies described above

The SFC has clarified that if a VA fall within the ambit of 'securities', the marketing, distribution, advising and managing of these VAs would constitute 'regulated activities' which require a licence. The SFC also recognises that there are unregulated crypto currency exchanges offering crypto currency futures contracts which expose investors to substantial risks and significant financial losses and has warned that Bitcoin futures fall within the definition of a 'futures contract'.
A new regulatory framework for virtual asset service providers ('VASP') was also introduced and commenced on 1 June 2023 . Intermediaries that engage in the business of operating a VA exchange in Hong Kong will require a VASP licence from the SFC. A licensed VA exchange will also be required to comply with the anti-money laundering and counter-terrorist financing requirements.

The retail trading of VAs is included in the Guidelines for Virtual Asset Trading Platforms ('VATP
') issued in June 2023, subject to restrictions such as ensuring that the VA does not fall under the definition of 'securities' under the SFO, unless the VA offering complies with the prospectus requirements under the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and does not breach the restrictions on offers of investments under Part IV of the SFO. The VA must also be eligible large-cap VAs of high liquidity. The SFC is exploring the possibility of expanding regulatory framework to allow listing of new tokens solely for professional investors (PIs).

The SFC also introduced various regulatory regimes that are applicable to existing licensed intermediaries if they intend to engage in VA-related activities under the Joint Circular, including VA fund management services, VA advisory services, VA brokerage and VA-related product distribution. Intermediaries will have to seek prior approval from/ consultation with the SFC prior to engaging in such activities, and will be subject to additional regulatory requirements.

The SFC also implemented regulatory regimes in respect of VA spot and futures exchange traded funds and authorized retail funds, as well as tokenized products. On 27 June 2025, the FSTB and the SFC jointly published two consultation papers aimed at introducing regulatory regimes for VA dealings and VA custodian services:

(1) the consultation paper for VA dealing is the second round of consultation in relation to VA related dealing, which replaced the original proposed regulatory regime for VA OTC trading venues under the regulation of the Customs and Excise Department. The proposed regime contains a broader legislative proposal, covering a wider range of settings including VA trading activities in physical locations, operations with mixed mode, digital-only platforms and payment networks; complex services such as trade settlements and asset-management activities; expanding the covered clientele covering individual and institutional investors, small-and-medium enterprises, and other market participants; and integrating VA custodial services into VA dealing activities.

(2) the proposed licensing regime for VA custodian services brings VA custodian services that are currently not subject to a stand-alone licensing regime within Hong Kong's regulatory remit. Currently, SFC-licensed VATPs are required to provide custodian services through their wholly-owned subsidiaries (i.e., their associated entities) that must be licensed under the trust and company service provider (TCSP) regime to hold the client assets of the VATP's clients. SFC-licensed intermediaries or banks providing VA-related services to its clients are required to hold the client VAs in custody with (i) SFC-licensed VATPs and (ii) banks or subsidiaries of locally-incorporated banks.Under the proposed licensing regime for VA custodian, safekeeping of VAs on behalf of client or instrument enabling transfer of VAs of clients (including the private key) may be subject to the VA custodian licensing regime. Additionally, among other things, external assessments (similar to those for SFC licensed VATPs) and regulatory requirements similar to those of the SFC Type 13 depositary licence are proposed to be fulfilled under the proposed licensing regime for VA custodian services.
It is proposed that the SFC will be the licensing and registration authority, and the standard setter for regulatory requirements applicable to licensed or registered VA dealing service providers and custodians; while the HKMA will be the frontline regulator for banks and their associated VA dealing and custodian activities.

Further, Hong Kong's Stablecoins Ordinance will take effect on 1 August 2025. The Stablecoins Ordinance aims to establish a licensing framework for issuers of fiat-referenced stablecoins (FRS) in Hong Kong. Under the Stablecoins Ordinance, anyone conducting business that involves issuing an FRS in Hong Kong or issuing an FRS claiming to maintain a stable value linked to Hong Kong dollars, whether within or outside Hong Kong, will be required to obtain a license from the HKMA. Individuals and entities involved must meet criteria in areas including reserve asset management and redemption processes. This includes properly segregating client assets, establishing a strong stabilization mechanism, and handling redemption requests from stablecoin holders at par value under reasonable condition. They are also required to adhere to standards on anti-money laundering and counter- terrorism financing measures, risk management protocols, disclosure and auditing obligation, and ensuring fitness and propriety.

Additional comments regarding the legal situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area

N/A


Economic conditions

Market size for financial services using crypto currencies and biggest companies in this business area

There is no publicly available information.

Additional comments regarding the economic situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area

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