Hong Kong aims to position itself as a trusted global hub for virtual assets. Its current crypto regulatory framework was shaped by incidents like the JPEX and Huonax scandals, which resulted in losses of over $172M, and eroded market confidence. In response, Hong Kong’s regulators now apply a risk-based approach centered on investor protection, operating with a “trust but verify” model.
This guide provides a complete overview of Hong Kong’s crypto licensing regime in 2025, from core requirements to strategic benefits.
TL;DR
- Hong Kong employs a dual-licensing system, with the Securities and Futures Commission (SFC) overseeing Virtual Asset Trading Platforms (VATPs) and the Hong Kong Monetary Authority (HKMA) overseeing stablecoin issuers.
- In 2023, the original licensing regime under the Securities and Futures Ordinance (SFO) was updated with rules under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) specifically addressing virtual assets. Licensing frameworks for OTC dealers and custodians are under proposal.
- Applicants must be companies incorporated or registered in Hong Kong with a real local presence, two Licensed Representatives, and at least one SFC-approved Responsible Officer who passes a “fit and proper” test.
- Application costs and review timelines vary depending on the business model and scope of licenses required.
- Licensed VATPs are subject to ongoing obligations under applicable SFO rules, AMLO regulations, and all SFC codes and guidelines.
Legal & Regulatory Background
Hong Kong’s crypto licensing regime is built on a dual framework supervised by the SFC, with regulatory foundations in the Securities and Futures Ordinance (SFO) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).
The SFO covers financial instruments and derivatives defined as securities. Platforms handling even one security token need both a Type 1 (Dealing in securities) and a Type 7 (Providing automated trading services) license.
AMLO Chapter 5B was introduced in 2023, creating a licensing regime for all virtual assets, regardless of whether tokens are securities. Existing VATPs were given one year to apply for an AMLO-compliant license.
SFO rules still apply to crypto assets that resemble traditional securities, so a licensed VATP may also be subject to SFO requirements. Since the characteristics of a virtual asset (VA) can change over time (e.g., a non-security token can change to a security token, or vice versa), VATPs are expected to stay compliant with both frameworks to ensure business continuity.
Emerging Policy Roadmaps
In February 2025, the SFC introduced the “A-S-P-I-Re” roadmap, a principles-based model for regulating virtual assets.
- Access: Expanding the scope of regulation to include licensing for virtual asset dealers (such as OTC traders, mixed-mode operations, and brokerage, block trading, or advisory services) and virtual asset custody providers. The goal is to broaden access to regulated services and improve market efficiency.
- Safeguards: Adopting risk-proportionate oversight and promoting regulatory clarity with flexible, outcome-focused, and technology-neutral standards.
- Products: Cautiously introducing advanced offerings such as derivatives and staking with restrictions that protect retail investors. The aim is to create a balanced regulatory environment that welcomes innovation while mitigating risk.
- Infrastructure: Encouraging cross-agency collaboration and upgrading the SFC’s supervisory technology with automated reporting and data-driven monitoring.
- Relationships: Promoting transparency in the policymaking and regulatory process, enabling retail investors to make informed decisions.
The Financial Services and the Treasury Bureau (FSTB) also introduced the “LEAP” framework for the development of digital assets in a policy statement published in February 2025.
- Legal and regulatory streamlining
- Expanding tokenised products
- Advancing use cases and cross-sectoral collaboration
- People and partnership development
These roadmaps are shifting Hong Kong’s regulatory framework into a multi-regulator system, creating overlapping obligations for businesses.
The HKMA’s Stablecoin Ordinance, effective August 1, 2025, introduces a dedicated licensing regime for fiat-referenced stablecoin issuers. It requires a minimum paid-up share capital of HKD 25 million and full reserve backing with high-quality, liquid assets.
At the same time, the SFC and FTSB have proposed new regimes to license virtual asset dealers and third-party custodians, aiming to close gaps in oversight and bring more parts of the virtual asset market under formal regulation.
Regulated Business Activities
- Virtual Asset Trading Platforms (VATPs): All platforms offering cryptocurrency exchange services (whether crypto-to-fiat or crypto-to-crypto) must be licensed.
- Stablecoin Issuers: Issuers of fiat-referenced stablecoins must also obtain a license.
- Custody Providers & Virtual Asset Dealers: Providers offering certain crypto-based products or the custody of virtual assets are subject to licensing requirements.
Hong Kong Crypto License Requirements
Securing a VATP license requires meeting a comprehensive set of criteria spanning corporate structure, capital, personnel, and operational integrity.
Corporate & Capital
- VA dealers and custodians (except banks or Stored Value Facilities) must be:
- locally incorporated with a permanent place of business in Hong Kong, or
- incorporated elsewhere but registered in Hong Kong under the Companies Ordinance, and identify suitable premises for storing books and records.
- VA dealers must maintain at least HKD 5 million in paid-up share capital and up to HKD 3 million in liquid capital, depending on their business model. Applicants are also required to hold excess liquid capital equal to at least 12 months of operating expenses.
- VA custodians must maintain at least HKD 10 million in paid-up share capital and up to HKD 3 million in liquid capital, depending on their business model.
Personnel & Governance
- A minimum of two responsible officers must be appointed to oversee compliance. At least one of them must reside in Hong Kong, and at least one of them must be a director.
- Directors, Responsible Officers, and major shareholders will be subject to the SFC’s “fit and proper” test covering financial status, experience, integrity, and character.
Operational Integrity
- Applicants must establish a governance framework for technology risks, including regular independent cybersecurity audits and penetration tests.
- Employee access to client assets must be limited to Responsible Officers, Managers, and their delegates.
- Commingling of client assets with firm or affiliate assets is prohibited.
- Applicants must have insurance covering 50% of cold wallet assets and 100% of hot wallet assets.
- At least 98% of client assets must be stored in cold wallets.
Financial Crime Compliance
- Applicants must implement KYC procedures, comply with AML standards, apply enhanced due diligence for high-risk clients, and conduct transaction monitoring.
- The Travel Rule applies to all virtual asset transfers. Simplified information is permitted, but transfers above HKD 8,000 require additional information on the originator.
Application Process
The SFC introduced a new VATP application procedure on December 18, 2024, built around a single external assessment conducted after applicants have fully implemented their systems and controls.
Applications are filed through the WINGS portal, with applicants uploading forms, internal policies, and proof of an engaged external assessor. An agreement on the scope of the assessment must be reached with both the SFC and the assessor before it begins. The SFC oversees the process, clarifies requirements, and provides feedback on findings.
Applicants must submit documents that show that the assessor is qualified and capable, and the external assessment is formally required to be a direct assurance engagement signed off by a certified public accountant.
Step 1: Corporate Setup (2–3 weeks)
- Register a limited liability or joint stock company in Hong Kong.
- Prepare a two-year business plan with financial and service descriptions.
- Draft the memorandum and articles of association and confirm the registered office or premises for storing books and records.
Step 2: Team Formation (concurrent with setup)
- Appoint Responsible Officers and licensed representatives.
- Provide detailed information for each appointee to meet the SFC’s “fit and proper” test.
- Finalize agreements with an external assessor and obtain required documentation for SFC approval.
Step 3: Submission and SFC Review
- Upload all documents and forms on the WINGS portal.
- Pay fees based on application type, license type, and number of licensed appointees and activities.
- Review timelines vary depending on the type of application.
Step 4: Financial setup (3-4 weeks)
- Open a corporate bank account in Hong Kong once the license has been issued.
- Deposit the required share capital (HKD 5M - 10M, depending on services offered).
- Deposit a minimum of HKD $3M liquid capital, and if required, excess liquid capital equal to at least 12 months of operating expenses.
- Obtain a bank certificate confirming the deposits.
Post-licensing Obligations
Licensed VATPs are expected to comply with all applicable rules under the SFO and its subsidiary legislation. They are also covered by the AMLO and all SFC codes and guidelines.
- VATPs and licensed representatives must remain fit and proper at all times.
- At least one responsible officer must reside in Hong Kong to supervise compliance.
- At least one responsible officer must also be a director.
- If all responsible officers are outside Hong Kong, they must remain reachable (preferably by telephone) and ensure proper internal controls are in place.
- Only offer retail investors high-liquidity tokens that have been pre-approved by the SFC.
- Report any changes in business scope and secure any additional licenses required.
- Proactively manage AML/KYC programs, update policies, and train staff regularly.
- Report security breaches and operational incidents immediately.
Common Reasons Why Applications Fail
In 2024, major exchanges like OKX, Bybit, Gate.HK, and Huobi HK withdrew their VATP license applications, indicating that Hong Kong’s regime suits firms able to commit significant resources to adjust operations, governance, and compliance.
The SFC generally rejects applications that fail statutory requirements or the “fit and proper” test. Before refusal, applicants receive a fair hearing, and they may appeal within 21 days to the Securities and Futures Appeals Tribunal.
Other factors can affect an applicant’s ability to obtain a crypto license in Hong Kong:
- Type of service or product proposed.
- Quality and completeness of the application.
- Quality of supporting documents.
- Changes made after submission, e.g., business scope, shareholders, responsible officers.
- Time taken to secure Hong Kong employment visas, if needed.
- Time taken for capital injection to meet financial requirements.
Benefits of a Hong Kong Crypto License
Tax Benefits & Strategic Expansion
Hong Kong is a strategic base for expansion across Asia and beyond. Individuals pay zero capital gains tax on virtual assets, which attracts global talent and investment.
Credibility & Legitimacy
An SFC crypto license strengthens credibility and builds trust. Complying with the market conduct and investor protection rules reassures stakeholders of a platform’s integrity and accountability.
Access to Markets and Investors
Licensed VATPs can enter regulated markets, increase liquidity, and attract institutional investors. This access creates opportunities for capital, expertise, and partnerships.
Conclusion
Hong Kong’s licensing regime is demanding, but it creates a clear and structured path for companies prepared to commit resources and align with regulatory standards. The process requires substantial capital, a strong governance framework, and strict compliance systems, but the payoff is a license that signals global credibility to investors, banks, and regulators.
Hong Kong offers a strategic base with access to Asian and global markets, tax benefits, and a reputation for investor protection. However, the financial, operational, and governance thresholds are high. This system filters out underprepared applicants, ensuring that only businesses with long-term commitment and top-class infrastructure succeed.
