Hong Kong’s strategic adoption of a regulated framework for crypto activities underscores its proactive stance in balancing innovation with investor protection. The detailed regulatory guidelines and structured licensing process provide a clear path for crypto businesses looking to operate in a dynamic and evolving market.

For businesses and investors navigating Hong Kong’s virtual asset sector, consider the following practical tips:

• Licensing: Consider obtaining both the SFO and AMLO licences. This dual-licensing strategy broadens your operational scope and demonstrates a strong commitment to regulatory compliance and investor protection.
• Regulatory Scrutiny: Due to the legislation’s recency, each crypto project is closely scrutinised by regulatory authorities. This increased scrutiny means your project must be prepared for a thorough review process, emphasising transparency, compliance, and operational integrity.

Our comprehensive report delves into Hong Kong’s regulatory framework for crypto assets, highlighting:

1. Business Analysis

The report delves deeper into Hong Kong’s crypto asset regulatory framework, providing a comprehensive guide for crypto businesses. It examines essential aspects, such as

• Stablecoin Issuance: A detailed exploration of the procedural steps for stablecoin issuance under Hong Kong law.
• Service Provider Licensing: Examination of the crypto asset service provider licensing process, enriched by an understanding of the requirements and operational standards set forth by Hong Kong’s regulatory authorities.

2. Compliance Guidance

Emphasising the importance of thorough preparation and compliance, the report offers detailed insights into compliance requirements, such as

• AML Regulations: Insights into AML and compliance frameworks, highlighting the importance of adherence to national and international standards in preventing financial crimes.
• Taxation: Overview of taxation and financial planning considerations for crypto businesses operating within the jurisdiction, reflecting the need for strategic operational structuring.

3. Launch Roadmaps

Actionable steps and up-to-date strategies for establishing and operating your crypto project in Hong Kong’s regulatory environment, ensuring a smooth and compliant launch.

4. Expert Insights

Perspectives from industry experts with a deep understanding of global regulatory environments offer guidance to navigate the complexities of Hong Kong’s crypto regulations.

Hong Kong’s regulatory environment for crypto assets includes the following key aspects:

• Licensing Types: The regulatory framework introduces two main types of licences under the Securities and Futures Ordinance (SFO) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). Depending on their operational scope and needs, entities may opt for one or both licences, with obtaining both recommended to ensure comprehensive compliance.
• Minimum Capital Requirement: A minimum paid-up share capital requirement of HK$5,000,000 (approximately USD 640,000) is expected for crypto exchanges based in Hong Kong, underscoring the financial robustness required.
• Application Fees: The application fees for licences are capped at $5,000, making the initial regulatory compliance process relatively accessible for new entrants.

Only fiat-referenced stablecoins are subject to regulation in Hong Kong. Entities intending to issue such stablecoins must obtain a licence from the Hong Kong Monetary Authority (HKMA).

Security tokens fall within the scope of the Securities and Futures Ordinance (SFO) and are regulated accordingly.

All other types of crypto assets, including utility tokens, remain largely unregulated at present.

Crypto mining activities are currently unregulated in Hong Kong.

There is no specific legal framework or regulatory guidance directly addressing the creation, operation, or governance of DAOs.

Hong Kong offers two corporate profits tax regimes:

• Single-tier Rate:

  Corporations are taxed at a flat rate of 16.5% on all assessable profits.

• Two-tiered Rate:

  • 8.25% on the first HK$2,000,000 of assessable profits; and
  • 16.5% on the portion of assessable profits exceeding HK$2,000,000.

The two-tiered system is intended to reduce the tax burden on small and medium-sized enterprises (SMEs). Most companies are eligible for the two-tiered rates, although eligibility depends on the nature of the company’s activities.

1. The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill, 2022.

2. “Licensing or registration conditions and terms and conditions for licensed corporations or registered institutions providing virtual asset dealing services and virtual asset advisory services” published by the SFC in January 2022.

3. Securities and Futures Ordinance

On 21 May 2025, the Legislative Council of Hong Kong passed the Stablecoins Bill, thereby introducing a comprehensive licensing framework for issuers of specified stablecoins. This development follows its initial publication in the Hong Kong SAR Gazette on 6 December 2024. The Ordinance will come into force on 1 August 2025.

Definition of Specified Stablecoin

Under the Ordinance, a “Specified Stablecoin” is defined as a stablecoin that purports to maintain a stable value by reference exclusively to:

• one or more official currencies;
• one or more units of account or stores of economic value; or
• any combination of the above.

Only stablecoins falling within this definition are subject to the new regulatory regime.

Licensing Requirements and Regulatory Scope

A licence from the Hong Kong Monetary Authority (HKMA) will be required for any person or entity that:

• issues specified stablecoins in Hong Kong in the course of business;
• issues specified stablecoins that reference the Hong Kong dollar in the course of business; or
• actively markets the issuance of specified stablecoins, whether in Hong Kong or elsewhere.

Key Licensing Criteria

Applicants must meet a set of regulatory and prudential standards, including but not limited to:

• A minimum paid-up capital requirement of HK$25 million;
• Robust governance arrangements;
• Adherence to prudential requirements;
• Clear and enforceable redemption mechanisms; and
• Sound reserve management policies.

All details of the regulatory obligations and supervisory expectations are available in our full Hong Kong report.

Continuing its proactive approach to regulating the digital asset ecosystem, the Securities and Futures Commission of Hong Kong issued new regulatory guidelines in April 2025 specifically targeting licensed Virtual Asset Trading Platforms (VATPs) that intend to offer staking services.

Definition of Staking Services

Staking services are defined as any arrangements involving the commitment or locking of client virtual assets for the purpose of participating as a validator in a blockchain protocol operating under a proof-of-stake (PoS) consensus mechanism, with rewards generated and distributed as a result of that participation.

Key Regulatory Requirements for VATPs

The SFC has set out stringent conditions that licensed VATPs must meet before providing staking services:

• Direct Control: VATPs must retain direct control over client assets used in staking and are prohibited from outsourcing custody to third parties.
• Robust Controls: Platforms are required to implement comprehensive safeguards and error-prevention measures to protect staked assets.
• Comprehensive Disclosure: Clients must receive clear, full disclosure of staking mechanisms, associated risks, and reward structures.
• Due Diligence: VATPs must conduct thorough due diligence on the blockchain protocols used and any third-party service providers involved.
• SFC Approval: Prior written approval from the SFC is mandatory before launching any staking offering.

All detailed regulatory requirements and supervisory expectations are available in our full report.

In February 2025, the Securities and Futures Commission of Hong Kong released a new regulatory roadmap aimed at advancing the territory’s development as a virtual assets hub. The roadmap, announced on 19 February 2025, is built on five pillars summarised in the acronym ASPIRe: Access, Safeguards, Products, Infrastructure, and Relationships.

1. Access – Streamlining Market Entry

The SFC recognises that the current regulatory regime for virtual assets applies mainly to virtual asset trading platform operators (VATPs) and other existing intermediaries. However, other participants—such as over-the-counter (OTC) dealers and virtual asset custodians—remain outside the regulatory perimeter.

To address this:

• A new licensing regime for OTC trading will be introduced to align OTC dealers with the standards applied to VATPs. (This regime was announced in February 2024, but has not yet been enacted).
• A licensing framework for virtual asset custodians will also be established, mirroring rules applicable to traditional custodians, including capital adequacy, cybersecurity, and asset segregation.

The SFC intends to complete the legislation for the custody regime by the end of 2025.

2. Safeguards – Enhancing Compliance Flexibility

Acknowledging the overly prescriptive nature of existing regulations, the SFC will move towards a more flexible and technologically neutral regime, while maintaining robust investor protection. Proposed reforms include:

• Replacing rigid hardware-based custody requirements with outcome-based, technology-neutral standards;
• Moving away from mandatory hot/cold wallet ratios, and instead adopting a holistic security approach, including real-time monitoring and third-party audits;
• Allowing more flexible insurance and compensation frameworks, aligned with global practices;
• Clarifying investor onboarding procedures to enable better assessment of investor profiles;
• Regulating virtual assets based on the nature of the activity and underlying asset, rather than their digital form.

3. Products – Expanding Offerings for Professional Investors

The current regime restricts VATPs from offering a variety of services, including new token listings, margin trading, and derivatives. The SFC is considering broadening the scope of permitted products and services — primarily for professional investors. These may include:

• Access to new token listings, beyond established virtual assets like Bitcoin;
• Participation in derivatives trading;
• Introduction of margin financing requirements aligned with traditional financial markets;
• Provision of staking services, supported by technical and custodial safeguards (already in place);
• Borrowing and lending services, with appropriate risk management controls.

4. Infrastructure – Modernising Oversight

The SFC aims to upgrade its reporting and surveillance systems, as current mechanisms are largely incident-specific and hinder effective oversight. Planned improvements include:

• Introducing automated virtual asset reporting tools;
• Adopting data-driven surveillance technologies to monitor transactions, wallet behaviour, and blockchain activity;
• Strengthening coordination with local regulators, law enforcement, and international counterparts to enhance cross-border risk management and compliance.

5. Relationships – Building Awareness and Trust

Public understanding of virtual assets remains limited, increasing the risk of uninformed investment decisions. To close this knowledge gap:

• The SFC will increase direct engagement with investors through educational initiatives;
• It will regulate financial influencers ("finfluencers"), publishing best practice guidance for responsible public communication;
• Through the Virtual Assets Consultative Panel and international forums, the SFC will gather stakeholder feedback and clearly articulate its regulatory objectives;
• There will also be a focus on developing the local virtual assets talent pool through targeted training programmes to address current skills shortages.

Summary

The ASPIRe roadmap sets out the SFC’s medium- to long-term regulatory strategy for virtual assets. It combines an expansion of the regulatory perimeter —including new licensing regimes — with efforts to promote flexibility, modernise surveillance infrastructure, and improve investor and industry education. The reforms are designed to instil greater confidence among market participants and reinforce Hong Kong’s ambition to become a premier global centre for virtual assets.