In-depth analysis of Hong Kong's new regulations on virtual assets: What's new in the consultation document?

For industry practitioners, the first question to clarify is: what in this document is a "confirmation of the old system" and what are "truly new things"?

Author: Spinach

In December 2025, the Hong Kong Financial Services and the Treasury Bureau and the Securities and Futures Commission jointly released an important document. The document is divided into two parts: the first is a summary of the consultation on the licensing system for VA Dealing services, and the second is further public consultation on VA advisory services and VA asset management services.

For industry practitioners, the first question to clarify is: what in this document is a "confirmation of the old system" and what are "truly new things"?

This article will break it down one by one.

First, let's clarify the background: Which systems have already been implemented?

Before interpreting this document, it is necessary to review the existing framework for the regulation of virtual assets in Hong Kong. The following provisions are already in effect and are not new content in this document:

1. VATP Licensing Scheme (effective June 2023)

The licensing scheme for Virtual Asset Trading Platforms (VATP) officially launched on June 1, 2023. Any centralized virtual asset trading platform operating in Hong Kong or actively marketed to the Hong Kong public must obtain a license from the SFC. To date, 11 institutions have received formal licenses.

2. VA service will be provided for traditional license plate upgrades (circular by the end of 2023).

In December 2023, the SFC and HKMA jointly issued a "Joint Circular on Virtual Asset-Related Activities of Intermediaries," allowing intermediaries holding traditional financial licenses to provide virtual asset-related services after meeting certain conditions:

• Institutions holding a Type 1 license (securities trading) can provide VA trading services to clients through the "Integrated Account Arrangement".
• Institutions holding a Type 4 license (Securities Advisor) may provide advice on VA transactions.
• Institutions holding a Type 9 license (asset management) may manage portfolios containing VA (subject to a 10% exemption or other conditions).

As of mid-2025, approximately 40 entities had upgraded to Type 1 license plates, 37 to Type 4 plates, and 40 to Type 9 plates. These upgrades were completed within the existing framework and are not changes brought about by this document.

II. The core content of this document: three things

Having clarified the background, let's examine what new information this document actually contains. The core content can be summarized into three points:

First thing: Summary of the consultation regarding the VA Dealing license (confirming details)

In June 2025, the Financial Services and Treasury Board and the SFC launched a public consultation on the "VA Transaction Services Licensing Regime". Section A of this document is a summary response to that consultation, confirming the following key details:

(1) Final confirmation of scope and definition

The definition of VA Dealing services will be highly aligned with License 1 (Securities Dealing) under the Securities and Futures Ordinance. Specifically, anyone engaging in the following activities on a business basis will need to apply for a license:

• To enter into or offer to enter into agreements with others for the sale, purchase, subscription or underwriting of virtual assets.
• Inducing others to enter into the aforementioned agreement

The "limb (b)" (activities involving VA derivatives and structured products) mentioned in the original consultation document has been removed because such activities are generally regulated by licenses 1, 2 or 11 under the Securities and Futures Ordinance and do not require re-licensing.

(2) Confirmation of exemption circumstances

The following situations are exempt from applying for a VA Dealing license:

• Trading through an SFC-licensed VA dealer
• Transactions conducted by the principal
• Intra-group transactions
• Use VA as a means of payment for purchasing goods or services.
• Activities of HKMA-licensed stablecoin issuers
• Transactions undertaken by licensed VA asset managers as an adjunct to the provision of management services

(3) No transitional arrangement for "deemed licensed"

This is one of the most pressing concerns for industry professionals. The SFC has made it clear that it will not provide a "deemed licensed" transitional arrangement . On the day the new system takes effect, all unlicensed VA trading service providers must immediately cease their operations.

The SFC explained that the "deemed licensed" arrangement could cause public confusion regarding the regulatory status of institutions, which would be detrimental to investor protection. However, the SFC also pledged to consider a reasonable effective date to allow market participants time to adjust.

(4) Fast-track approval channel

For entities already holding an SFC license (such as VATP licensed platforms and upgraded Type 1/4/9 licensed companies), a fast-track approval process will be provided. These entities have already passed the appropriate candidate screening, and the process for applying for a new license will be significantly simplified.

(5) Unlicensed persons are prohibited from marketing to the Hong Kong public.

The document confirms that entities not licensed or registered by the SFC are prohibited from actively marketing their VA trading services to the Hong Kong public. The SFC will issue further guidelines on the specific scope of "active marketing" (whether it includes online advertising, social media, direct outreach, etc.).

Second matter: Further consultation on the VA Advisory license (new) ⭐

This is the truly new content in this document. The SFC proposes to add a separate licensing category under the Anti-Money Laundering Regulation (AMLO): VA Advisory Service Provider.

(1) Why is this new license required?

Currently, if an institution wants to provide advisory services on virtual asset investments, it needs to hold a Type 4 license (securities advisor) and operate in accordance with the requirements of the Joint Circular. However, a Type 4 license is essentially a license for "securities," while most virtual assets are not securities.

The addition of a separate VA Advisory license is intended to fill this regulatory gap and ensure the implementation of the principle of "same activities, same risks, same regulations".

(2) Definition and Scope

"Providing advice on virtual assets" includes two types of activities:

• Direct advice : Provide opinions on "whether to buy or sell, which type of virtual asset to buy or sell, when to buy or sell, and under what terms to buy or sell".
• Published analysis reports : Analysis or research reports published to help recipients make the above decisions.

(3) Exemption Circumstances

Referring to the exemption framework for license plate number 4, the following situations are eligible for exemption:

• Advice is provided only to wholly-owned subsidiaries within the group.
• As an ancillary act of a licensed VA dealer or VA asset manager
• Incidental acts in the practice of lawyers, barristers, and certified public accountants
• Incidental acts in the performance of duties by a registered trust company
• General information provided through public publications or broadcasts

(4) Regulatory requirements

The requirements for VA Advisory service providers will be largely the same as those for Type 4 licensed companies, including:

• Anti-money laundering and counter-terrorist financing (AML/CFT) requirements
• Financial resource requirements: HKD 5 million in paid-in capital; HKD 100,000 in working capital (without holding client assets) or HKD 3 million (with holding client assets).
• Knowledge and experience requirements (e.g., passing a regulatory knowledge test)
• Customer suitability assessment, risk disclosure, conflict of interest management, etc.

Thirdly: Further consultation on the VA Management license (new) ⭐

Similar to the VA Advisory license, the SFC also proposed adding another independent licensing category: VA Management Service Provider.

(1) Definition and Scope

"Virtual asset management" refers to managing a virtual asset investment portfolio for others and being granted investment decision-making power. A typical scenario is a fund manager—clients entrust you with their funds, and you decide what to buy and when to buy and sell.

(2) No minimum threshold is set

This is a crucial detail. SFC has explicitly stated that there is no minimum threshold of 10% .

Currently, Type 9 licensed companies are exempt from additional VA-related requirements when managing their investment portfolios if virtual assets comprise less than 10%. However, under the new VA Management licensing regime, a license will be required if the investment portfolio contains any proportion of virtual assets.

SFC's reasoning is:

• Virtual assets are inherently risky, and even if they constitute a small percentage of the total asset portfolio, they should still be subject to the same regulatory standards.
• To prevent institutions from deliberately keeping their holdings below the threshold to circumvent licensing requirements.

This regulation may put significant compliance pressure on small asset management institutions.

(3) Custody requirements: still under consideration

SFC is considering whether to require VA asset managers to entrust client assets to SFC-licensed custodians.

Under the current Type 9 license system, institutions managing private equity funds can choose their own overseas custodians, provided that due diligence is sufficient. If the new regulations tighten this flexibility, it will have a significant impact on existing operating models.

At the same time, the SFC also acknowledged a practical problem: when private equity/venture capital funds invest in newly issued tokens, these tokens may not yet be backed by licensed custodians. Therefore, the SFC is considering allowing self-custody within certain limits without requiring a custody license.

(4) Regulatory requirements

Similar to VA Advisory, the requirements for VA Management service providers will be largely the same as those for Type 9 licenses, including AML/CFT requirements, financial resource requirements (RMB 5 million in paid-up capital and RMB 100,000-3 million in working capital), and client suitability assessments.

III. Timetable and Action Guidelines for Practitioners

schedule

Guidelines for Practitioners

1. If you are currently engaged in OTC or VA trading services

• Consultation on VA Dealing licenses has been completed, with legislation expected in 2026.
• There is no "deemed licensed" transitional arrangement; the application must be completed before it takes effect.
• We recommend contacting the SFC immediately ( [email protected] ) to initiate pre-communication.

2. If you currently provide VA investment consulting services

• The VA Advisory license is currently in the consultation phase and has not yet been finalized.
• If you have any comments, please submit them to the Finance and Treasury Bureau before January 23, 2026.
• If you already hold a Type 4 license, you can apply through the fast track in the future.

3. If you are currently working in VA Asset Management

• The VA Management license is also in the consultation stage.
• Special attention should be paid to the two provisions of "no minimum threshold" and "management requirements".
• If you already hold a No. 9 license, you can apply through the fast track in the future.

4. If you already hold a VATP license or license number 1/4/9

• Under the new licensing system, a fast-track approval process will be available.
• However, it is still necessary to pay attention to the specific requirements and prepare application materials in advance.

IV. Summary: Core Information of this Document

To summarize the core information of this document in one sentence:

Hong Kong is expanding the regulation of virtual assets from "single-point regulation of trading platforms" to a "full-license matrix"—the three major business lines of trading, consulting and asset management will all have independent licensing requirements, fully aligned with the traditional financial license system of 1/4/9.

For practitioners, the key changes to pay attention to are:

2026 will be a pivotal year. The legislative process, implementing regulations, and effective dates—each stage will directly impact the compliance strategies of practitioners. It is recommended to closely monitor subsequent announcements from the SFC and the Treasury Board, and to initiate pre-communication procedures as early as possible.

This article is based on the "Consultation Conclusion on Legislative Proposals for the Regulation of Virtual Asset Transactions" and the "Further Public Consultation on the Regulation of Virtual Asset Advisory Services and Asset Management Services" published by the Financial Services and the Treasury Bureau and the Securities and Futures Commission of Hong Kong in December 2025. It is for informational purposes only and does not constitute legal or investment advice.

Reference:

https://apps.sfc.hk/edistributionWeb/gateway/EN/consultation/doc?refNo=25CP12

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