CMS Expert Guide to Crypto Regulation in Hong Kong
- How is crypto regulated?
- What are the steps taken by the regulator to adopt MiCAR?
- Are the following activities regulated or unregulated in your jurisdiction? ― Direct sales of tokens by issuers— Exchange (buy/sell) ― Custody (hold) ― Borrowing/lending ― Yield/staking services —Staking on proof of stake consensus mechanisms(please indicate if NFTs are treated differently from fungible cryptoassets for each activity)
- Can offshore business provide services to local customers on either active solicitation or reverse solicitation basis?
- How long would establishing a cryptoasset business/obtaining a license in your jurisdiction take?
- What would be the approximate overall cost of obtaining a licence?
- What is the probability (%) of success in obtaining a licence?
- What other limitations are there in your jurisdiction when looking to set up a cryptoasset business? E.g., Compliance requirements and physical presence
- Any other relevant information?
jurisdiction
Disclaimer: This chapter was last updated 16 June 2025 and does not reflect any subsequent developments. The information provided is intended for general informational purposes and should not be construed as legal advice.
1. How is crypto regulated?
| AML Regulation | Any other regulation |
The Anti-Money Laundering and Counter Terrorist Financing Ordinance (Cap. 615) (“AMLO”) is the primary legislation which regulates customer due diligence and record keeping requirements. Although the AMLO does not specifically provide regulations in respect of crypto assets, the SFC has published licensing conditions with regard to virtual assets trading platforms (“VATP”) which cover AML/CTF guidance and requirements. Earlier this year, the Financial Services and the Treasury Bureau (“FSTB”) proposed to expand the AMLO to regulate providers of virtual asset (“VA”) over-the-counter (“OTC”) trading services. The goal here is to align OTC regulatory compliance with the VATP licensing regime, meaning operators with physical outlets or digital platforms for VA spot trading in Hong Kong will need to be licensed under the expanded AMLO. | The nature and characteristics of the crypto asset and the services provided will affect the applicable regulations. For example, if the crypto asset contains characteristics of a security as defined under the Securities and Futures Ordinance (Cap. 571) (“SFO”), it will be regulated by the Securities and Futures Commission (“SFC”) and other relevant laws and regulations. Furthermore, a SFC license is required for all centralised VATP exchanges. The SFC encourages VATP operators to apply for dual licences under the SFO and VATP regimes to cover their trading of security and non-security assets. Earlier this year, the Hong Kong Monetary Authority (“HKMA”) issued a circular that outlined its expectations for authorised institutions operating under the Banking Ordinance (Cap. 155). The circular addressed the growing interest of these institutions in providing custodial services for virtual assets and emphasised the need for adequate safeguards and risk management. |
2.What are the steps taken by the regulator to adopt MiCAR?
N/A to Hong Kong.
3. Are the following activities regulated or unregulated in your jurisdiction? ― Direct sales of tokens by issuers— Exchange (buy/sell) ― Custody (hold) ― Borrowing/lending ― Yield/staking services —Staking on proof of stake consensus mechanisms(please indicate if NFTs are treated differently from fungible cryptoassets for each activity)
| AML Regulation | Any other regulation |
Currently, the only virtual asset services regulated under the AMLO are in relation to the operation of a VATP, OTC services and lending as outlined above. NFTs are not currently regulated, as long as the NFT itself does not fall within the definition of “securities” or “collective investment scheme” under the ambit of the SFO and the purview of the SFC. Following the issuance of the circular on SFC-authorised funds with exposure to virtual assets by the SFC in December 2023, Hong Kong has just had its first ETFs listed which invest directly in VAs tokens (such as bitcoin and ether). | For borrowing/lending, as mentioned in Q1 above, the HKMA recently issued expectations for authorised institutions acting as intermediaries, distributing tokenized products and providing standalone custodial services. The circular set out numerous expectations for authorised institutions, including conducting risk assessments and establishing policies to mitigate risks before offering virtual asset custodial services. |
4. Can offshore business provide services to local customers on either active solicitation or reverse solicitation basis?
To determine whether the business may provide services to local customers, offshore businesses such as VA exchanges should consider their nexus to Hong Kong and whether their VA services fall within the licensing regime. If they are actively marketing to the Hong Kong public, it should consider obtaining a VATP license.
Generally, offshore virtual asset exchanges that do business with Hong Kong customers would need to establish a local Hong Kong subsidiary or register a Hong Kong branch in order to apply for a VA Exchange licence.
5. How long would establishing a cryptoasset business/obtaining a license in your jurisdiction take?
The SFC encourages VATPs to apply for licenses under both the AMLO and SFO regimes, as the terms and features of a virtual asset may evolve over time.
For a TCSP licence, the processing time is anticipated to be around 3 months.
For a VATP licence, the processing time is anticipated to be more than 1 year. The SFC has noted that the processing time for a VATP licence may be longer than for a standard licensing application.
6. What would be the approximate overall cost of obtaining a licence?
The costs of obtaining the relevant licence(s) will depend on the nature and scope of the services to be provided.
Legal and other professional fees will be necessary.
7. What is the probability (%) of success in obtaining a licence?
The probability will depend on the individual applicant and its ability to satisfy the various requirements.
As the VATP licence is relatively new, we anticipate that applications will be carefully scrutinised. There have been around 20 applications with 2 acceptances so far.
8. What other limitations are there in your jurisdiction when looking to set up a cryptoasset business? E.g., Compliance requirements and physical presence
| AML Regulation | Any other regulation |
Limitations and requirements will depend on the specific licence being applied for. Regarding the VATP licence, additional guidance has been issued by the SFC in relation to compliance with AML regulations. VATPs must promptly prepare and submit their license applications and refrain from claiming to be licensed until approved by the SFC. The SFC may impose additional conditions on the VATP licensee if the licence is granted. These conditions may relate to risk management, anti-money laundering or anti-terrorism financial policies and procedures, financial resources, cybersecurity and other elements listed in Section 53ZRK of the AMLO. | Various financial regulators have issued guidance in respect of crypto assets including the SFC, the Hong Kong Monetary Authority and the Insurance Authority. VATPs are required to comply with the Travel Rule which provides fundamental information for carrying out sanctions screening and transaction monitoring, as well as other risk mitigation measures. Under the Travel Rule, VATPs shall (i) when acting as an ordering institution, obtain, record and submit the required information of the originator and recipient to the beneficiary institution; and (ii) when acting as a beneficiary institution, obtain and record the required information submitted by the ordering institution or intermediary institution. |
9. Any other relevant information?
How are stablecoins regulated in Hong Kong? Who is the regulator?
With effect from 1 August 2025, the Stablecoins Ordinance (Cap. 656) (“SO”) will come into operation, establishing a licensing regime for fiat-referenced stablecoin (FRS) issuers.
Any person or entity, who issues an FRS in Hong Kong or issues an FRS that purports to maintain a stable value with reference to Hong Kong dollars in or outside Hong Kong, will need to obtain a licence from the HKMA. Marketing of stablecoins is also regulated under the ordinance.
The HKMA is authorised to issue guidelines about any matter relating to the SO. Although failure to comply with the guidelines will not, in itself, render a person or entity to judicial or other proceedings, the guidelines are admissible as evidence and will be considered by the Court if relevant to any question arising in the proceeding.
Depending on the nature of the regulation, the HKMA may make regulations to implement and give effect to the SO after consulting the Financial Secretary and licensees (as applicable).
The Hong Kong Monetary Authority (“HKMA”) is the regulator of stablecoins under the SO.
