An Introduction to the New Licensing Regime for Virtual Asset Deals, Virtual Asset Advice and Virtual Asset Management Services

Consultation Conclusions and Further Public Consultation

On December 24, 2025, after considering feedback from the industry and market participants, the Hong Kong Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Securities and Futures Commission (SFC) published their conclusions regarding the legislative proposal to regulate dealing in virtual assets (the Consultation Conclusions). The proposal was set out in a public consultation paper published in June 2025 (the Consultation Paper) and proposed the establishment of a new virtual asset (VA) dealing licence under the legal framework of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615 of the Laws of Hong Kong) (AMLO). The Consultation Conclusions summarize the preliminary regulatory approach and the licensing requirements in relation to VA dealing. The FSTB and the SFC have launched a further public consultations regarding the legislative proposal to introduce separate licensing requirements under the AMLO for VA advisory services and VA management services.

According to the Consultation Conclusions, three new licences for VA-related services will be introduced under the AMLO, covering three major categories: (1) VA dealing, (2) VA advisory and (3) VA management.

Compared to the existing licences for regulated activities under the Securities and Futures Ordinance (Cap.571 of the Laws of Hong Kong) (SFO) for similar businesses, namely Type 1 (dealing in securities), Type 4 (advising on securities), and Type 9 (asset management), which need to be uplifted to cover VA-related business activities, the new VA dealing licence will cover a broader scope of business activities and models than the current uplifted Type 1 licence. Financial institutions currently holding an uplifted Type 1 licence can obtain the new VA dealing licence through an expedited approval process. The SFC suggests that the regulatory requirements to be imposed on the new VA advisory services licence and the VA management services licence, should follow those applicable to the existing uplifted Type 4 and Type 9 licences. Financial institutions that currently hold the uplifted Type 4 and Type 9 licences may also obtain the new VA advisory services licence and the VA management services licence, through an expedited approval process. 

In the following sections, we provide a detailed analysis of the regulatory requirements outlined in the Consultation Conclusions for the three new licences, under the legal framework of the AMLO.

First Licence: VA Dealing Licence

Second Licence: The Proposed VA Advisory Licence

Third Licence: Proposed VA Management Licence

Next Step

The FSTB and the SFC will finalize legislative proposals based on the Consultation Conclusions in response to feedback from the public consultation. The legislative proposals will provide for the establishment, under the AMLO, of separate licensing regimes applicable to: (1) VA dealing service providers, (2) VA advisory service providers, and (3) VA management service providers. It is expected that the bill will be introduced into the Legislative Council for scrutiny in 2026. 

Conclusion

Under the Virtual Asset Service Provider (VASP) licensing regime under the AMLO, which took effect on June 1, 2023, and the Type 1 and Type 7 regulated activity licensing regimes under the SFO, VATPs licensed by the SFC that hold VASP, Type 1, and Type 7 licences (collectively referred to as Exchange Licences) are permitted to provide VA dealing services to clients. These VA dealing services under the Exchange Licenses are not limited to on-platform trades executed through a matching engine but have also been extended to include OTC dealing services.

Apart from Exchange Licences, other financial institutions providing VA dealing, VA advisory or VA management services are currently regulated by the SFC under the SFO’s Type 1 (dealing in securities), Type 4 (advising on securities), and Type 9 (asset management) regulated activity licences, which require corresponding uplifts to cover VA-related activities. However, the existing licensing regime under the SFO does not adequately capture the growing market demand for VA OTC trading services, and the service models available to licensed financial institutions are relatively limited (e.g., institutions holding an uplifted Type 1 licence can only provide VA dealing services to clients through SFC-licensed exchanges). Additionally, some entities that provide advisory or management services solely in relation to VAs (without involving securities) may fall outside the SFC’s regulatory perimeter, as their business does not involve traditional securities.

In light of the evolving market environment, the need to ensure adequate investor protection, and to promote the healthy development of Hong Kong’s VA industry, the FSTB and the SFC published the Consultation Paper in June 2025. The Consultation Paper proposed bringing a broader range of VA-related activities, including VA OTC trading, into the regulatory scope and establishing a dedicated VA dealing licensing regime. On December 24, 2025, the Consultation Conclusions and the public consultation were released, with the public consultation recommending the introduction of dedicated licensing regimes for VA advisory and VA management services.

The introduction of new licensing regimes under the AMLO covering the three major categories of services, namely (1) VA dealing, (2) VA advisory, and (3) VA management, will further enhance Hong Kong’s regulatory framework for VA-related services. The licensing regimes clarify the regulatory responsibilities and their scope, and through stringent qualification, risk control and ongoing compliance requirements, ensure that institutions fulfill their obligations including safeguarding investor’s assets and complying with the AML/CFT requirements. These three new licensing regimes will operate independently of the SFO regimes applicable to traditional securities and futures contracts related services. They will bring service providers that exclusively provide VA-related services under regulatory oversight, which better aligns with the development of the VA industry.

As the SFC further refines the legislative framework, consults with industry stakeholders and optimizes approval processes, Hong Kong is expected to establish a transparent and robust regulatory regime for VA-related services. This will reinforce Hong Kong’s position as an international hub for virtual assets, and provide stronger institutional safeguards for investor confidence and sustainable market development.