Hong Kong virtual asset licensing 2026 marks a major step in the city’s effort to regulate dealing, custody, advisory, and asset management activities involving digital assets. With new capital thresholds, expanded statutory definitions, and direct oversight by relevant authorities, the framework introduces far‑reaching compliance obligations for market participants. Businesses operating in or targeting Hong Kong will need to reassess internal controls and cross‑border practices ahead of the regime’s rollout.

Hong Kong is preparing to introduce a comprehensive licensing framework for virtual asset service providers, expanding regulatory oversight beyond trading platforms to include dealing, custody, advisory, and asset management activities.

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The initiative is being led by the Financial Services and the Treasury Bureau (FSTB) in collaboration with the Securities and Futures Commission (SFC). According to the authorities’ public consultation documents and subsequent conclusions, the government intends to finalize legislative proposals under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and introduce a bill to the Legislative Council in 2026.

The move is designed to enhance investor protection, strengthen market integrity, and reinforce Hong Kong’s role as an international financial center for virtual assets.

Licensing for virtual asset dealing services

Under the proposed regime, any person or entity engaging in the business of dealing in virtual assets will be required to obtain a license.

The statutory definition covers activities such as making, offering, or inducing agreements to acquire, dispose of, or subscribe for virtual assets. Securities and futures contracts remain governed under existing securities legislation.

Key proposed capital requirements include:

• Minimum paid-up capital: HK$5 million
• Minimum liquid capital: Up to HK$3 million (depending on the business model)
• Entities must also maintain excess liquid capital equivalent to at least 12 months of operating expenses

Notably, there are no transitional or “deeming” arrangements. Existing market participants will not be grandfathered into the regime and must obtain a license before continuing operations once the new law comes into effect.

The framework follows an activity-based approach. Providers offering payment facilitation, margin trading, or other services that fall within the statutory scope may also be captured.

Standalone custody regime

A separate licensing regime will apply to virtual asset custodians.

Custodian services are defined to include entities that safeguard private keys or have unilateral authority to transfer client assets. The scope is technology-neutral and focuses on control over client assets rather than the technical structure of the platform.

Proposed requirements for custodians are more stringent:

• Minimum paid-up capital: HK$10 million
• Minimum liquid capital: HK$3 million
• Entities must also maintain excess liquid capital equivalent to at least 12 months of operating expenses
• Operational standards: Robust internal controls, operational resilience, and suitable insurance arrangements to protect client assets

Entities that do not retain the authority or capability to transfer client assets, such as non-custodial wallet providers, may fall outside the regime.

Advisory and asset management licensing

In addition to dealing and custody, the government plans to introduce licensing requirements for entities advising on or managing portfolios of virtual assets.

The proposed structure broadly mirrors Hong Kong’s existing securities licensing framework. Advisory services are expected to resemble the Type 4 (advising on securities) regime, while portfolio management functions align with the Type 9 (asset management) regime.

Proposed capital thresholds include:

• Minimum paid-up capital: HK$5 million
• Minimum liquid capital:
  • HK$100,000 (where not holding client assets)
  • HK$3 million (where holding client assets)

Offering or marketing such services to the public without an appropriate license will be prohibited.

Marketing restrictions and supervisory powers

The new licensing regimes will apply not only to Hong Kong-based operators but also to overseas entities that actively solicit Hong Kong clients.

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Supervisory, disciplinary, and appeal powers will align with those applicable to traditional financial services. The SFC and, where relevant, the Hong Kong Monetary Authority (HKMA), will have the authority to impose sanctions, suspend or revoke licenses, and initiate enforcement action.

The framework does not cover providers dealing solely in securities and futures contracts, which remain subject to the Securities and Futures Ordinance (SFO).

Compliance implications for businesses

The proposed reforms introduce material legal and operational obligations for affected businesses.

Companies operating in or targeting the Hong Kong market should consider:

• Reviewing whether their activities fall within the statutory definitions
• Assessing capital adequacy against the proposed thresholds
• Strengthening internal controls and client asset protection mechanisms
• Enhancing AML/CFT systems in line with AMLO requirements
• Reviewing cross-border marketing practices

Failure to comply may result in criminal liability, regulatory sanctions, or civil penalties.

Strategic context

Hong Kong’s expanded licensing framework forms part of a broader strategy to institutionalize virtual asset regulation. The city has already introduced a licensing regime for stablecoin issuers administered by the HKMA, signaling a coordinated effort to regulate digital asset activities within established financial governance structures.

With legislative proposals expected in 2026, market participants will need to prepare for a more formalized supervisory environment. For firms seeking regulatory clarity and institutional credibility in the virtual asset space, Hong Kong’s evolving framework may offer both higher compliance standards and greater long-term certainty.