Hong Kong regulators are moving forward with legislation to establish mandatory licensing regimes for cryptocurrency dealers and custodians, following the conclusion of public consultations. The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) announced on December 24, 2025, that firms providing crypto trading or custody services in Hong Kong will be required to obtain licenses once the new framework takes effect.
This initiative builds upon Hong Kong's expanding regulatory landscape for digital assets. Earlier in 2025, the city brought its Stablecoin Ordinance into force, creating a separate licensing regime for stablecoin issuers. The current move extends mandatory licensing, which was previously an opt-in framework introduced in 2020. To date, the SFC has approved only 11 companies for crypto exchange licenses, having rejected more applicants than it approved.
The consultation period for the trading and custody rules closed in August 2025, with regulators receiving over 190 submissions from market participants, industry groups, and professional bodies. While feedback broadly endorsed the regulatory direction, respondents requested clearer definitions and more tailored requirements for different service types. In response, authorities refined the framework to better distinguish between trading, custody, management, and advisory roles.
Concurrently, the SFC launched a new one-month public consultation seeking feedback on proposals to introduce separate licensing regimes for crypto advisory service providers and management service providers. This consultation, which will run until January 23, 2026, links the proposed regimes to Hong Kong's existing Anti-Money Laundering (AML) and Counter-Terrorist Financing framework. Regulators have shifted from initially including these services under the trading framework to regulating them under systems similar to those used in traditional securities markets.
Julia Leung, CEO of the SFC, stated that further developing Hong Kong's crypto regulatory framework would help the city maintain its position in global digital asset market developments by "fostering a trusted, competitive and sustainable ecosystem." The proposed licensing regimes aim to balance innovation with risk management, focusing on market integrity, investor protection, and operational resilience.
After reviewing the latest consultation feedback, the government plans to finalize legislative proposals and expects to submit the draft ordinance to the Legislative Council in 2026. This comprehensive approach is part of Hong Kong's broader effort to establish itself as a global crypto hub, complementing existing initiatives like tokenization tests and its reputation as a financial gateway between mainland China and global capital markets.
