Hong Kong issues a consultation summary on legislative proposals for licensing of virtual asset trading and asset management services.

On May 26, the Hong Kong Treasury Bureau and the Securities and Futures Commission of Hong Kong issued a consultation summary on legislative proposals regarding the regulation of service providers offering advice on virtual assets and providers of virtual asset management services. The proposed licensing system for providing advice on virtual assets and virtual asset management received widespread market support during the consultation period. Following the principle of "same business, same risks, same rules", the proposed new licensing system will align its coverage with the scope of regulated activities under Categories 4 (providing advice on securities) and 9 (providing asset management) of the Securities and Futures Ordinance. The Hong Kong Treasury Bureau and the Hong Kong Securities and Futures Commission are currently finalizing legislative proposals for the new regime under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615), with the aim of submitting a draft ordinance to the Legislative Council by 2026. Along with the proposed licensing system for virtual asset trading and virtual asset custody, this series of new regulations will enhance participation in the Hong Kong digital asset market and help build a robust and secure ecosystem under the SFC's "ASPIRe" roadmap. Ms. Ashley Alder, CEO of the Securities and Futures Commission, said, "The summary of this further consultation marks the final step in enhancing our digital asset regulatory framework and paves the way for the long-term development of our ecosystem. The broad market support reflects the necessity of establishing a robust and comprehensive regulation. The new system, aligned with the standards of traditional financial services, will not only strengthen investor protection but also promote responsible innovation." Mr. Christopher Hui, Secretary of the Treasury Bureau, said, "In June last year, the Treasury Bureau issued the 'Hong Kong Digital Asset Development Policy Declaration 2.0' ('Policy Declaration 2.0'), outlining our vision to strengthen risk management and investor protection, promote responsible financial innovation, and develop Hong Kong into a leading global digital asset center. The proposed regulatory system covering service providers offering advice on virtual assets and providers of virtual asset management services is an important part of expanding Hong Kong's digital asset legal framework. Together with the existing licensing systems for virtual asset trading platforms and stablecoin issuers, as well as the proposed systems for virtual asset trading and custody services, our legal framework will span the major nodes of the digital asset ecosystem, forming a trustworthy and sustainable system similar to traditional finance, leading us towards the vision outlined in the 'Policy Declaration 2.0'." The Securities and Futures Commission strongly encourages service providers who are already or intend to engage in providing advice on virtual assets or virtual asset management to contact the Commission early to discuss before submitting an application. This will help industry players to have a deeper understanding of the proposed system, to progress the licensing process more efficiently, and to ensure compliance with regulatory requirements under the new system.