Upcoming Licensing Regimes for Virtual Asset Services in Hong Kong

On 27 June 2025, the Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) launched two joint consultations to introduce licensing regimes for VA dealing and custodian service providers.

While only consultations at this stage, the direction of travel for market participants under the soon to be introduced regimes has been pretty clear. Specifically - any person who carries on a business of, or who provides a dealing service in any VAs, or who provides a VA custodian services in Hong Kong should be (i) be licensed/registered with the SFC to conduct such activities and (ii) comply with the relevant regulatory requirements (e.g. financial resources, knowledge and experience, AML/CFT, reporting and disclosures and investor protection safeguards).

Honing in on crypto fund managers, these parties should take note of the following key requirements proposed by the SFC:

• Asset managers (including unregulated VA fund managers) will need to be licensed to conduct VA dealing activities if they deal with VA or place trade orders with dealers while managing their own clients’ VA portfolios;
• SFC-licensed/registered fund managers will need to be licensed to provide VA custody services if they provide self-custody to their managed funds, which invest in VA that enable the transfer of fund VAs; and
• Fund managers will be required to use SFC-licensed/registered VA custodian service providers in Hong Kong for safekeeping client VAs.

Two immediate outcomes come to mind:

• For those managers that currently hold an uplifted Type 9 VA licence, it is clear that unlike their securities counterpart, they cannot also deal in VA as an incident of the VA management licence. As a result, an additional licence application will be needed under this new regime. 
• More importantly, for (the vast majority of) managers that are unlicensed and are currently structured as offshore entities (for example as BVI Approved Managers), having a domestic execution entity in HK will no longer fly and a licence will definitely be needed for that entity under the new regime.   

Questions still remain about the scope of the new dealing regime – in particular, does having the licence also allow for marketing of VA funds in HK? Does the intra group exemption apply in respect of VA advisory services carried out in HK? The requirement to restrict the choice of VA custodians only to those licensed in HK will also be an interesting one – will the number of licensed entities in HK be sufficient to truly serve the ecosystem and allow for healthy development? 

We watch with a degree of anticipation as to how the regime will develop and be shaped into its final form when the consultation conclusions are published. In the meantime, crypto fund managers are encouraged to watch this space closely! 

Speak with our Hong Kong Financial Services Regulation & Funds team—Gaven Cheong, Didi Chan and Karen Austin—or your Charles Russell Speechlys contact today to learn more and share your thoughts.

Refer to the Public Consultation on Legislative Proposal to Regulate Dealing in Virtual Assets and the Public Consultation on Legislative Proposal to Regulate Virtual Asset Custodian Services.