The Hong Kong Securities & Futures Professionals Association (HKSFPA) has voiced conditional support for the city's planned adoption of the Organisation for Economic Co-operation and Development's (OECD) Crypto Asset Reporting Framework (CARF). While endorsing the framework's goals of enhancing transparency and combating tax evasion, the industry group is urging the Hong Kong government to implement softer, more pragmatic rules during local implementation to avoid overburdening crypto businesses.
The HKSFPA's key recommendations focus on three areas: penalty caps, director liability, and data protection. The group is concerned that the current proposals lack limits on per-account penalties, which could create compliance uncertainty and impose harsh financial exposure on firms acting in good faith. It recommends establishing clear caps on fines. Furthermore, the association argues that penalties should primarily target institutions rather than individual directors, unless misconduct is proven, and is urging for safeguards to shield compliant business leaders from personal liability.
On data privacy, the HKSFPA stresses the need for stronger protections for the sensitive client information—such as tax residency and transaction records—that crypto asset service providers must collect and share under CARF. The group also seeks operational flexibility, suggesting that companies which cease operations be allowed to transfer record-keeping duties to regulated third parties to maintain compliance without undue burden.
Hong Kong is among the first 27 jurisdictions globally committed to commencing the automatic exchange of crypto tax data with partner countries by 2028, as part of a group of 76 markets implementing CARF. This move aligns with the city's broader strategy to establish itself as a regulated digital asset hub. Hong Kong has already licensed 11 virtual asset trading platforms, including OSL and Hashkey Global, under existing Anti-Money Laundering (AML) and Know Your Customer (KYC) standards. The CARF will introduce an additional layer of international reporting obligations on top of these requirements.
The push for balanced rules comes as Hong Kong intensifies its crypto regulatory efforts. The government has outlined plans for 2026 to legislate new licensing regimes for Virtual Asset (VA) dealers and custodians, aiming to bring Over-the-Counter (OTC) desks, brokers, and custodians under a unified regulatory framework. In a related development, the Hong Kong Insurance Authority announced in December 2025 its intent to permit insurance providers to invest capital in digital assets.
