SFC regulatory framework for virtual asset services providers in Hong Kong – Are you ready?

June 2023

The virtual asset sector in Hong Kong is experiencing rapid development, buoyed by the government’s supportive stance in fostering a vibrant ecosystem for virtual assets within the city. In response to several collapses and market shocks as well as an increasing number of traditional financial institutions entering the digital assets space, there has been a flight to quality among market participants. With the Hong Kong Financial Services and Treasury Bureau Policy Statement and regulatory updates, Hong Kong continues to position itself as a hub for digital assets, even as certain other jurisdictions appear to be taking a step back from embracing the same. The Hong Kong market is poised to become more mature with more sophisticated players and a better regulatory environment.

The Securities and Futures Commission (“SFC”) has introduced a number of different regulatory rules and guidelines for different types of virtual asset services providers. These include provisions that will allow retail investors to access SFC-regulated services providers (e.g. Virtual Asset Trading Platforms) for a limited range of virtual assets - thereby creating numerous business opportunities and stimulating continuous market growth in the virtual asset sector. For this publication, we have excluded Virtual Asset Futures Exchange Traded Funds used for accessing exposure to Bitcoin (“BTC”) and Ethereum (“ETH”). 

For companies interested in venturing into the virtual asset space, there are several options that may be considered under the SFC regulatory regime: 

• Virtual Asset “Broker / Distributor” (“VA Dealing”)
• Virtual Asset “Trading Platform”  (“VATP”)
• Virtual Asset “Management”  (“VA Management”)
• Virtual Asset Advisory (“VA Advisory”)

In this publication, we provide a summary of the virtual asset regulations in Hong Kong and outline how we can support you throughout your journey in the virtual asset sector.