Hong Kong Opens Public Consultation on Digital Asset Trading and Custody Licensing Regime
Hong Kong’s Financial Services and the Treasury Bureau (FSTB) and Securities and Futures Commission (SFC) have launched a two-month public consultation on proposed legislation to establish a licensing regime for digital asset trading and custody service providers. Running until August 29, the consultation follows earlier feedback on over-the-counter (OTC) digital asset trading proposals.
Key elements include: 1) Digital asset trading service providers must obtain an SFC licence or registration to offer spot trading, token-to-token and token-to-fiat exchanges, brokerage, block trades and advisory or asset management services. 2) Digital asset custody service providers must hold licences or registrations to safeguard client assets and private keys.
Licensed entities will face requirements on financial resources, governance, risk management, disclosure, client asset protection, record-keeping and suitability assessments. The SFC will set regulatory standards while the Hong Kong Monetary Authority will oversee banks and stored-value facilities providing licensed services. The regime takes effect upon relevant law enactment, with no transitional “deemed licensed” period.
FSTB Secretary Bernadette Linn says the framework will build a robust, investor-centric digital asset ecosystem in Hong Kong. SFC CEO Julia Leung adds that the licensing regime will complete the digital asset ecosystem, benefiting institutional and retail investors with a secure and dynamic market environment.
This regulatory clarity may enhance market confidence and attract compliant trading and custody firms to Hong Kong’s crypto sector.
Neutral
The announcement of a formal licensing regime for digital asset trading and custody services in Hong Kong provides regulatory clarity and stronger investor protection, which typically stabilizes market sentiment without immediately driving bullish or bearish extremes. In the short term, traders may experience low volatility as firms prepare for compliance; in the long term, clear rules can enhance institutional participation and liquidity, contributing to a more mature market. This mirrors past regulatory introductions in major jurisdictions—such as the EU’s MiCA framework—where initial market reaction was neutral to slightly positive, followed by gradual confidence-building.