Hong Kong regulators target 2026 legislation for virtual asset dealer and custodian rules

Hong Kong plans to complete proposals to regulate virtual asset dealers and custodians and introduce the rules to the city’s Legislative Council in 2026, the Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) said Wednesday.

The proposals, developed after a two-month public consultation that drew more than 190 responses, are intended to create a licensing framework for virtual asset dealing and custodial services. The rules will fall under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and mirror existing requirements for securities dealing.

Hong Kong’s government is developing a regulatory environment to encourage the development of the city’s crypto industry in an effort to establish it as Asia’s crypto hub of choice over Singapore. Its stance contrasts with China’s, which is intensifying its crackdown on virtual currencies.

In February, the SFC announced new licensing regimes for over-the-counter trading alongside a review of derivatives and margin trading for virtual assets. In April, it greenlit staking services for licensed exchanges and funds, albeit under strict asset control and risk disclosure requirements. Spot crypto exchange-traded funds have been trading since 2024.

The proposed custodian regime focuses on securing private keys and protecting client assets, while the dealer rules align with licensing expectations for securities intermediaries. Both are part of the SFC’s broader ASPIRe roadmap aimed at improving access to regulated virtual asset markets.

The SFC also started a consultation to extend oversight to virtual asset advisers and managers. The regime would follow the “same business, same risks, same rules” principle and apply standards comparable to those for securities advisory and asset management services, the regulators said. Comments are due by Jan. 23.