Hong Kong regulators are preparing legislation that would bring crypto dealers and custodians under formal statutory supervision from 2026, marking another step in the city’s effort to build a tightly regulated but open digital asset market.
According to the Securities and Futures Commission, the government aims to introduce new laws covering virtual asset dealers and custodians after completing public consultations on the proposals. The framework would require firms providing brokerage-style crypto services or safeguarding client assets to obtain licences and comply with prudential, governance, and risk management standards.
The move is designed to close gaps in Hong Kong’s existing crypto regime. Since mid 2023, virtual asset trading platforms have been regulated under the city’s anti-money laundering framework, but standalone dealers such as over-the-counter brokers and specialist custodians have largely fallen outside direct statutory oversight.
Under the proposals, the SFC would act as the main regulator for licensed dealers and custodians, while the Hong Kong Monetary Authority would oversee banks and stored value facility providers offering custody services. Authorities have indicated there will be no automatic grandfathering, meaning firms would need to be licensed once the regime takes effect.
Officials say the focus is on safeguarding client assets, particularly private keys, and ensuring firms meet standards similar to those applied to traditional financial intermediaries. This includes fit and proper tests for management, financial resource requirements, and controls around asset segregation and operational resilience.
For Europe, the developments in Hong Kong are being closely watched. While the European Union is implementing MiCA, several jurisdictions in Asia are moving ahead with bespoke licensing regimes for specific crypto activities such as custody. That contrasts with the EU’s more harmonised approach but reflects similar concerns around investor protection and market integrity.
If passed, the Hong Kong legislation would reinforce the city’s positioning as a regulated digital asset hub, offering clearer rules for institutional players while tightening supervision over some of the riskiest parts of the crypto value chain.