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Hong Kong regulators target 2026 legislation for virtual asset dealer and custodian rules

AI Summary4 min read

TL;DR

Hong Kong plans to introduce legislative proposals in 2026 to regulate virtual asset dealers and custodians under a licensing framework. The SFC is also consulting on extending oversight to virtual asset advisers and managers, with comments due by January 23.

Key Takeaways

  • •Hong Kong aims to introduce legislation in 2026 to regulate virtual asset dealers and custodians under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
  • •The Securities and Futures Commission (SFC) is consulting on extending oversight to virtual asset advisers and managers, applying the 'same business, same risks, same rules' principle.
  • •The regulatory push is part of Hong Kong's strategy to establish itself as Asia's crypto hub, contrasting with China's crackdown on virtual currencies.
  • •The proposed custodian regime focuses on securing private keys and protecting client assets, while dealer rules align with licensing expectations for securities intermediaries.
  • •These efforts are part of the SFC's broader ASPIRe roadmap to improve access to regulated virtual asset markets.
Colonnade at the Hong Kong Legislative Council building
The Legislative Council building in Hong Kong (Andy Yip/Shutterstock)

What to know:

  • Hong Kong plans to introduce legislative proposals to regulate virtual asset dealers and custodians in 2026.
  • The proposals aim to create a licensing framework under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
  • The SFC is consulting on extending oversight to virtual asset advisers and managers, with comments due by Jan. 23.
  • Hong Kong plans to introduce legislative proposals to regulate virtual asset dealers and custodians in 2026.
  • The proposals aim to create a licensing framework under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
  • The SFC is consulting on extending oversight to virtual asset advisers and managers, with comments due by Jan. 23.

Hong Kong plans to complete proposals to regulate virtual asset dealers and custodians and introduce the rules to the city’s Legislative Council in 2026, the Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) said Wednesday.

The proposals, developed after a two-month public consultation that drew more than 190 responses, are intended to create a licensing framework for virtual asset dealing and custodial services. The rules will fall under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and mirror existing requirements for securities dealing.

Hong Kong's government is developing a regulatory environment to encourage the development of the city's crypto industry in an effort to establish it as Asia's crypto hub of choice over Singapore. Its stance contrasts with China's, which is intensifying its crackdown on virtual currencies.

In February, the SFC announced new licensing regimes for over-the-counter trading alongside a review of derivatives and margin trading for virtual assets. In April, it greenlit staking services for licensed exchanges and funds, albeit under strict asset control and risk disclosure requirements. Spot crypto exchange-traded funds have been trading since 2024.

The proposed custodian regime focuses on securing private keys and protecting client assets, while the dealer rules align with licensing expectations for securities intermediaries. Both are part of the SFC’s broader ASPIRe roadmap aimed at improving access to regulated virtual asset markets.

The SFC also started a consultation to extend oversight to virtual asset advisers and managers. The regime would follow the “same business, same risks, same rules” principle and apply standards comparable to those for securities advisory and asset management services, the regulators said. Comments are due by Jan. 23.

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  • The European Union's tax-reporting directive, effective Jan. 1, mandates crypto-asset service providers to report detailed user and transaction data to national tax authorities.
  • The DAC8 rules aim to close tax reporting gaps in the crypto economy, enhancing visibility similar to that of bank accounts and securities.
  • Crypto firms have until July 1 to comply with DAC8's reporting requirements, after which non-compliance may result in penalties.

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