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The Hong Kong Virtual Asset Regulatory Framework

Hong Kong's VA regime rests on a two-track licensing model under the SFC, complemented by a stand-alone stablecoin issuer regime administered by the HKMA, and money-service rules at the Customs and Excise Department. New regimes for OTC dealers, custodians, advisers and asset managers of non-security VAs are being legislated for 2026.

1. The two-track model (plus a third for stablecoins)

The single most useful question to ask about any token is: "Is it a security?" The answer routes the activity into one of two regulatory tracks, and stablecoins sit in a third statute of their own.

Track 1 - SFO

Tokenised shares, bonds, fund units, profit-sharing instruments, structured products. Same rules as paper securities, plus extra expectations on the tokenisation layer.

Regulator: SFC

Track 2 - AMLO Schedule 3B

Non-security VAs (BTC, ETH, most L1/L2 tokens). Operating a VA exchange in or into HK requires a VATP licence.

Regulator: SFC

Track 3 - Stablecoins Ordinance

Fiat-referenced stablecoins issued in HK or referencing HKD. 100% reserve backing, par redemption, HK$25m capital.

Regulator: HKMA

1A. The SFO track - tokens that are "securities"

If a token falls within the definition of "securities" or "futures contract" in Schedule 1 of the SFO (Cap. 571), the standard regime for securities applies. The SFC takes a "see-through / same business, same risks, same rules" approach: a tokenised bond is still a bond.

  • Type 1 - Dealing in securities (and platforms that list at least one security token).
  • Type 4 - Advising on securities (including tokenised securities and, with VA uplift, non-security VAs).
  • Type 7 - Providing automated trading services (ATS) - VA exchanges that match security tokens.
  • Type 9 - Asset management - applies to managers running VA portfolios; if VA exposure is >= 10% of GAV, the SFC's specific Terms and Conditions apply.
  • The prospectus regime under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) applies to public offers of tokenised shares/debentures, and Part IV authorisation applies to public offers of CIS interests.

1B. The AMLO VASP track - non-security VAs

The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022 inserted a new Part 5B in AMLO (Cap. 615), and a Schedule 3B, creating the VASP licensing regime that took effect on 1 June 2023.

  • The only currently regulated "VA service" is operating a VA exchange - centralised platforms that match offers to buy/sell VAs and that come into possession of client assets.
  • Any person carrying on a VA service in HK, or actively marketing such a service to the HK public from overseas, must hold an SFC VATP licence.
  • Failure to obtain a licence is a criminal offence: up to HK$5,000,000 + 7 years' imprisonment.
  • A platform listing both security and non-security tokens needs the dual licence (Type 1 + Type 7 + AMLO VASP). The SFC operates a single application pathway.

1C. The Stablecoins Ordinance - HKMA

Hong Kong passed the Stablecoins Ordinance (Cap. 656) on 21 May 2025; it commenced on 1 August 2025. It is administered by the HKMA, not the SFC.

  • Licence required to: (i) issue a fiat-referenced stablecoin (FRS) in Hong Kong; (ii) issue a HKD-referenced FRS anywhere in the world; or (iii) actively market an FRS to the HK public.
  • Core requirements: HK incorporation, HK$25m minimum paid-up capital, 100% reserve in high-quality liquid assets, segregation, par-value redemption, monthly attestations, AML/CTF, fit-and-proper, recovery and wind-down planning. Algorithmic stablecoins are not eligible.
  • Pre-existing issuers had until 31 October 2025 to apply; provisional licences are valid until 31 January 2026.

1D. Money Service Operators - Customs and Excise

The C&ED licenses MSOs under AMLO Part 5 for fiat money-changing and remittance. Pure crypto-to-crypto activity falls outside the MSO regime, but a fiat-to-VA OTC desk may need both an MSO licence (for the fiat leg) and the proposed VA dealer licence once enacted.

2. Key definitions

TermDefinition / source
Virtual assetCryptographically secured digital representation of value used (or intended to be used) as a medium of exchange, for governance, voting or investment, transferable electronically. CBDCs and certain limited-purpose digital tokens are carved out. (s. 53ZRA AMLO)
VA serviceCurrently limited to operating a centralised VA exchange (Schedule 3B AMLO).
Security tokenA token that is "securities" or a "futures contract" under SFO Schedule 1 - shares, debentures, fund units, CIS interests, structured products. Treated as traditional securities with a tokenisation wrapper.
Non-security VANative L1/L2 cryptocurrencies (BTC, ETH), utility tokens, most NFTs. Regulated under AMLO when traded on a centralised VA exchange.
Fiat-referenced stablecoin (FRS)A stablecoin claiming to maintain a stable value relative to one or more fiat currencies, regulated under the Stablecoins Ordinance.
Professional Investor (PI)As defined in SFO Schedule 1 and the Securities and Futures (Professional Investor) Rules - institutional, corporate, and high-net-worth individuals meeting prescribed thresholds.

3. Timeline of key milestones

  • Nov 2018 - SFC's conceptual framework / opt-in approach for VA fund managers and platforms.
  • Nov 2019 - SFC Position Paper on Regulation of VATPs; Type 1 + Type 7 opt-in licensing for security-token platforms.
  • 31 Oct 2022 - FSTB Policy Statement on VA Development; "same activity, same risks, same regulation" principle.
  • Dec 2022 - LegCo passes the AMLO amendment introducing the VASP regime.
  • 1 Jun 2023 - AMLO VASP regime in force; dual SFO + AMLO licensing operational.
  • 2 Nov 2023 - SFC circulars on tokenisation of SFC-authorised investment products and intermediaries' tokenised securities activities.
  • 22 Dec 2023 - SFC-HKMA Joint Circular on Intermediaries' VA-related Activities; retail access to licensed VATPs opened.
  • 30 Apr 2024 - First Asia spot Bitcoin and Ether ETFs trade on HKEX.
  • 19 Feb 2025 - SFC publishes the ASPIRe Roadmap (12 initiatives, 5 pillars).
  • 7 Apr 2025 - SFC and HKMA permit VA staking services subject to safeguards.
  • 1 Aug 2025 - Stablecoins Ordinance commences.
  • 27 Jun - 29 Aug 2025 - Joint FSTB/SFC consultation on VA dealer and custodian licensing regimes.
  • 14 Aug 2025 - SFC enhanced custody circular for VATPs.
  • 30 Sep 2025 - Supplemental Joint Circular: in-kind VA fund subs/redemptions, PI easings, staking integrated.
  • 24 Dec 2025 - Consultation conclusions for VA dealer/custodian regimes; new consultation on VA adviser/asset manager regimes opens; bill targeted for 2026.

4. Who regulates what

RegulatorScope
SFCLead VA regulator. Licenses VATPs (SFO Type 1+7 + AMLO VASP), Type 9 VA portfolio managers, intermediaries dealing in or advising on tokenised securities. Will also license the upcoming VA dealer/custodian/adviser/asset manager regimes.
HKMALicenses and supervises stablecoin issuers under the Stablecoins Ordinance. Co-regulator with the SFC for AIs' VA-related activities. Drives tokenised bond and Project Ensemble (wholesale CBDC) initiatives.
FSTBGovernment policy lead - publishes consultations and proposes legislation; authored the 2022 Policy Statement and the 2025 dealer/custodian/adviser/manager consultations.
Customs & Excise (C&ED)MSO licences under AMLO Part 5 - relevant where a VA business also moves fiat.
Inland Revenue (IRD)Tax administration. DIPN 39 sets out the IRD's view on profits-tax treatment of digital assets - generally taxable as trading income if HK-sourced trade; long-term holdings may be capital.
LegCoEnacts primary legislation (AMLO amendments, Stablecoins Ordinance, forthcoming dealer/custodian bill).

5. The SFC's ASPIRe roadmap (2025-2026)

Published 19 February 2025, the ASPIRe Roadmap sets twelve initiatives across five pillars:

  • A - Access: simplify market access; introduce licensing for OTC dealers and custodians; attract liquidity and global platforms.
  • S - Safeguards: raise custody technology standards; address insurance and compensation arrangements (delivered in part by the 14 Aug 2025 custody circular).
  • P - Products: expand offerings - new token-listing pathways, derivatives for professional investors, staking, borrowing/lending.
  • I - Infrastructure: straight-through regulatory reporting, market surveillance tools, cross-agency coordination.
  • Re - Relationships: investor education, industry outreach, and transparency.
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Watch this space.

A bill amending AMLO to introduce the VA dealer and custodian regimes is targeted for LegCo introduction in 2026. The current OTC + custody position is interim. Until commencement, OTC desks operate under general AMLO/MSO rules; standalone non-security VA custody is regulated indirectly through the parent VATP / Type 9 / TCSP licence.

Sources

Not legal advice. Information current as of April 2026. Verify dates and figures against the official sources above before acting.