Hong Kong Plans to Grant New Licenses to Four Major Cryptocurrency Services by 2026

Hong Kong SAR Government Introduces New Regulatory Reforms

The Hong Kong Special Administrative Region (SAR) government has introduced new regulatory reforms to further strengthen its position as an international financial center and respond to the rapidly evolving fintech market.

Christopher Hui, Secretary for Financial Services and the Treasury (FSTB), announced on Monday, October 5, 2026, a plan to significantly expand regulations concerning virtual assets. Specifically, the government plans to submit a legislative proposal by the end of 2026 to establish a new licensing system targeting four major services related to virtual assets: "trading," "custody," "advisory," and "management."

This initiative is part of Hong Kong's financial and fintech strategy for 2026-2030, aiming to incorporate a diverse range of businesses involved in the digital asset market into a formal regulatory framework.

Comprehensive Regulatory Framework Targeting Four Major Services

The newly proposed system significantly expands the scope of regulation beyond the existing focus on virtual asset exchanges. The Securities and Futures Commission (SFC) will lead the establishment of a strict supervisory system tailored to each activity.

〇 Trading Services:
These services will comply with parts of the existing framework used for Type 1 securities trading, requiring adherence to investor protection, asset management, and anti-money laundering (AML) measures.

〇 Custody Services:
This targets companies responsible for safeguarding customers' private keys, ensuring risk management and security standards associated with asset holdings in Hong Kong. The SFC plans to launch a digital asset custody monitoring system in the latter half of 2026.

〇 Advisory and Management Services:
These will be structured based on Type 4 securities regulations and Type 9 asset management requirements, with rules developed under the principle of "same business, same risk, same rules."

These new licensing systems will operate alongside the licensing system for fiat-backed stablecoins supervised by the Hong Kong Monetary Authority (HKMA).

Positive Reception from the Market and Acceleration of Institutional Investor Participation

The series of regulatory expansions in Hong Kong has generally received a positive response from the industry. A public comment period regarding the rules for virtual asset advisory and management held in January 2026 attracted numerous opinions, with many stakeholders welcoming the establishment of clear rules.

This backdrop reflects the assured growth of the digital asset market for institutional investors in Hong Kong. The balance of digital assets held and managed by banks in the city exceeded $14 billion (approximately ¥2.2 trillion) by the end of 2025, marking a year-on-year increase of about 180%. Additionally, the balance of tokenized deposits reached $29 billion (approximately ¥4.58 trillion). Furthermore, cryptocurrency spot ETFs have been listed in Hong Kong, with a total market capitalization reaching approximately $4.3 billion (around ¥678.8 billion), indicating that regulated investment products are steadily establishing themselves in the market.

Some industry stakeholders view Hong Kong as an important "testing ground" for the introduction of cryptocurrency under regulation in Asia.

Strengthening Fraud Prevention and Advanced Infrastructure Development

Alongside the introduction of the licensing system, the Hong Kong government is also implementing robust monitoring and defense measures to enhance market reliability.

The FSTB and HKMA are considering legal changes targeting technology and telecommunications companies to improve the detection and removal of malicious content, including fraud generated or facilitated by the misuse of AI (artificial intelligence). Additionally, as part of the pilot phase of Project Ensemble aimed at utilizing Central Bank Digital Currency (CBDC), the introduction of a 24/7 digital payment and operational infrastructure through EnsembleTX is planned for around the end of 2026. This will lead to the formation of an advanced financial ecosystem that integrates traditional finance with digital assets.

In the future, after the legislative proposal is submitted to the Hong Kong Legislative Council, the specific implementation date and applicable exemptions are expected to be officially determined. Hong Kong is advancing to solidify its position as a hub for global digital asset business by establishing a clear and professional regulatory environment.

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