TL;DR:
- The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) of Hong Kong published the consultation conclusions to regulate virtual asset services.
- Firms safeguarding client funds will require a minimum paid-up capital of HKD 5 million ($638,095) and liquid capital of HKD 3 million ($328,862).
- Regulated companies that do not hold client assets must comply with a minimum liquid capital requirement of HKD 100,000 ($12,760).
The Financial Services and the Treasury Bureau (FSTB) along with the Securities and Futures Commission (SFC) presented the conclusions of the regulatory consultation on digital asset advisory and management licensing. In the statement, they highlight the business sector’s backing of the proposed guidelines under the risk alignment principle.
With this regulatory proposal, they seek to structure the local financial ecosystem. According to the SFC’s official report, the proposed framework aligns virtual asset advisory and management activities with existing licensing regimes for traditional securities markets and discretionary portfolio management.
Under this scheme, advisory services will formally encompass commercial recommendations linked to the purchase or sale of crypto assets. On the other hand, portfolio management rules will apply specifically to corporations exercising discretionary control over portfolios composed of digital assets.
The policy design seeks to avoid duplication of financial burdens. Regulators explained that dually licensed entities will not face double regulatory capital requirements; instead, they will automatically adopt the highest financial threshold required among their authorized activities.
Financial requirements and risk mitigationÂ
The SFC listed the liquidity demands for service providers according to their operating model. Firms that do not safeguard user funds will have lower obligations compared to platforms that directly manage the deposited resources.
The framework imposes a liquid capital floor of HKD 100,000 for those operating without custody. For companies storing client assets, the required amount rises to HKD 5 million in paid-up capital.
The data published by the SFC suggests that these capitalization measures aim to mitigate the risk of operational insolvency. Authorities explained in their statement that the general regulatory environment will be complemented by parallel proposals focused on the trading and custody of digital assets.
The framework seeks full assimilation with current banking practices. In this regard, SFC CEO Julia Leung stated that the conclusion of this consultation period represents the closing stage to structure the local digital ecosystem and promote the responsible development of the crypto industry.
The authorities of the Asian territory expect the parliamentary debate to begin shortly. The FSTB and the SFC reported that the institutional goal is to formally introduce the bill to the Legislative Council during the year 2026.
