Hong Kong Regulators to Require Licensing for Crypto Dealers and Custodians Under Expanded Framework
On December 24, 2025, Hong Kong regulators, including the Financial Services and the Treasury Bureau and the Securities and Futures Commission (SFC), announced that firms providing virtual asset dealing or custody services will be required to obtain licenses under an expanded regulatory framework.
This licensing initiative will bring crypto brokers, dealers, and custodians under regulatory oversight. It covers virtual asset-to-fiat and virtual asset-to-virtual asset conversions, brokerage services, block trading, and related advisory functions. Over-the-counter (OTC) trading will also be regulated under this regime.
Custodians must be either licensed or registered, and any entity holding client private keys is required to obtain a license. The framework emphasizes asset segregation, strong key-management controls, enhanced cybersecurity, and robust business continuity planning. Dealers are required to place client assets only with licensed Hong Kong custodians.
The regime includes fit-and-proper requirements for firms. Dealers must maintain approximately HK$5 million in capital, while custodians are required to have about HK$10 million in paid-up capital.
Additionally, the regulators have opened a consultation on extending the licensing regime to virtual asset advisers and asset managers. The SFC will be granted powers to supervise, inspect, and sanction firms operating in this space.
Julia Leung, Chief Executive of the SFC, stated that the expanded framework aims to foster a secure and competitive digital asset ecosystem with strong investor protection. She also encouraged firms to engage in pre-application discussions with the SFC.
