Cryptocurrency trading is legal in Hong Kong, but the regulatory landscape is complex and rapidly evolving. If you’re considering crypto trading or launching a crypto business in Hong Kong, this guide will help you understand the current legal framework and what’s coming next.
The Regulatory Landscape: Who’s in Charge?
Hong Kong doesn’t have a single crypto regulator. Instead, three main authorities oversee different aspects of the crypto world:
- Securities and Futures Commission (SFC) – Handles crypto-assets that look like traditional securities, plus licensing for trading platforms
- Hong Kong Monetary Authority (HKMA) – Focuses on stablecoins and payment-related crypto activities
- Insurance Authority (IA) – Covers crypto-related insurance products
While there is no overarching legislation that defines “crypto-asset” or “cryptocurrency,” Hong Kong refers broadly to these as “virtual assets”.
When Does a Crypto-Asset Become a Regulated Product?
Here’s the key question: Does your crypto-asset behave like a traditional security (e.g. stocks, bonds, or investment funds)?
If yes, you’ll need to follow the Securities and Futures Ordinance rules. This means:
- Getting proper licenses before you can issue, trade, or advise on these assets
- Meeting strict compliance requirements
- Following professional conduct standards
This typically applies to:
- Crypto investment funds
- Security token offerings (STOs)
- Exchanges listing tokenized securities
Beyond individual crypto-assets, there’s also the question of crypto trading platforms themselves. Until recently, exchanges could voluntarily seek regulation, but this landscape has fundamentally changed.
Mandatory Licensing for Virtual Asset Trading Platforms (VATPs)
Virtual Asset Trading Platforms (VATPs) are centralized exchanges that facilitate virtual asset trading. Hong Kong moved from voluntary to mandatory licensing for all VATPs on June 1, 2023. Previously, exchanges could choose whether to seek regulatory oversight, but now all centralized virtual asset trading platforms must obtain proper licensing to operate in or market to Hong Kong.
The Dual Licensing Framework
Under Hong Kong’s sophisticated dual licensing structure, VATPs must obtain licenses under both:
- Securities and Futures Ordinance (SFO) for security tokens
- Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) for non-security virtual assets
The SFC recommends all operators obtain both licenses to future-proof their operations.
Key VATP Requirements
Licensed VATPs must meet stringent requirements:
- Financial: HK$5 million minimum paid-up capital and liquid assets equivalent to at least 12 months of operating expenses held in Hong Kong
- Operational: Meaningful and substantial presence in Hong Kong with at least two Responsible Officers
- Compliance: Full segregation of client assets, comprehensive KYC procedures, and AML/CFT compliance
- Technology: 98% cold storage for client virtual assets, 24/7 security monitoring, and advanced cybersecurity measures
Professional vs. Retail Access
Licensed VATPs can serve both professional and retail investors, but with important restrictions:
Professional investors (individuals with HK$8 million+ portfolios, institutions, qualifying corporations) can access broader ranges of virtual assets including security tokens.
Retail investors are limited to “eligible large-cap” non-security tokens only—primarily major cryptocurrencies like Bitcoin and Ethereum that are included in at least two acceptable indices from independent providers. All retail clients must undergo comprehensive knowledge assessments.
AML/CFT Compliance Obligations
Licensed VATPs have extensive customer due diligence (CDD) and record-keeping requirements under the AMLO, including:
- Customer wallet addresses
- IP addresses and location data
- Transaction details and hashes
- Source of funds documentation
- Monitoring for suspicious activities and sanctioned addresses
The SFC enforces these AML/CFT rules and oversees compliance for all licensed platforms.
Current Market Status
As of June 2025, Hong Kong has 10 fully licensed VATPs operating under this regime, with 9 applications under review. Criminal penalties for unlicensed operations include fines up to HK$5 million and seven years imprisonment.
Upcoming Stablecoin Regulations
The rise of stablecoins — particularly those used as a medium of payment — has caught the attention of the HKMA. While stablecoins may not fall under existing payment or stored-value regulations, the HKMA is developing a dedicated framework to oversee issuers and custodians of stablecoin arrangements.
A discussion paper released by the HKMA highlights the risks associated with payment-linked stablecoins, especially in terms of monetary stability and systemic risk. Proposed regulation would cover areas such as:
- Licensing of stablecoin issuers
- Management of reserve assets
- Liquidity requirements
- Anti-money laundering controls
- Local incorporation for foreign providers operating in Hong Kong
The HKMA has indicated that stablecoins backed by traditional assets (e.g. USD) will be the initial focus, with algorithmic models considered in later stages. In May 2025, the Hong Kong Legislative Council passed the Stablecoins Bill and it’s expected to come into effect sometime later this year.
Marketing Crypto-Assets
While the general promotion of crypto-assets isn’t prohibited, restrictions exist. If the asset qualifies as a security, marketing and distribution rules under the SFO apply. Additionally, the SFC has taken a cautious stance on crypto derivatives, particularly those involving futures contracts, and has discouraged retail offerings in these areas.
Under the new VASP regime, unlicensed entities will be barred from marketing crypto services to the public. Licensed providers will need to meet high standards of conduct and transparency.
Key Points on Regulatory Scope
| Area | Regulated in Hong Kong? | Regulator |
|---|---|---|
| Spot trading of crypto (non-securities) | Yes (under VASP regime) | SFC (licensing), HKMA (guidance) |
| Security tokens | Yes | SFC |
| Crypto funds | Yes | SFC |
| Crypto derivatives | Yes (restricted) | SFC |
| Stablecoin issuance | Not yet, but soon | HKMA |
| Custodial services | Yes (if under trust or VASP) | SFC, Trust Registrar |
| Marketing to the public | Restricted unless licensed | SFC if the asset qualifies as a security, otherwise VASP if marketing an exchange |
How Can Monx Help?
If you’re launching a crypto exchange, issuing tokens, or managing a Web3 project from Hong Kong, navigating regulation is critical. Monx helps digital asset businesses understand licensing requirements, set up compliant structures, and meet their ongoing tax and AML obligations.
Email us at hello@monx.team to discuss your crypto project in Hong Kong.
