Hong Kong’s Strategic Leap Toward Crypto Regulation

Hong Kong’s Financial Services and the Treasury Bureau (FSTB), alongside the Securities and Futures Commission (SFC), has announced plans to introduce comprehensive regulations for cryptocurrency trading and custody services by 2026. This decision follows an extensive consultation process involving over 190 public feedback submissions. The forthcoming framework aims to align with existing Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) standards, creating a regulatory landscape similar to that for securities brokers.

Upcoming Regulatory Framework: What to Expect?

The primary goal of the 2026 regulatory agenda is to streamline cryptocurrency trading and custody services. By instituting standards akin to those in securities markets, the initiative aims to enhance compliance and governance. This comprehensive regime will clarify the operational expectations for market participants.

Key focus areas include the protection of private keys and safeguarding client assets. Trading rules will specify who can engage in brokerage activities and outline the compliance required. These measures are crucial components of the SFC’s ASPIRe roadmap, which emphasizes increased access to regulated cryptocurrency markets.

Will Hong Kong Emerge as a Leading Crypto Hub?

Hong Kong aims to foster a supportive regulatory environment to boost the cryptocurrency industry’s growth, positioning the city as a key crypto hub in Asia. In contrast to China’s restrictive measures, Hong Kong’s strategy is positioned to compete with Singapore’s crypto-friendly policies.

Recent regulatory reforms have reinforced the city’s commitment to its 2026 goals. New licensing schemes for over-the-counter trading were introduced in February, followed by evaluations on derivatives and margin trading. In April, licensed exchanges and funds were authorized to offer staking services under strict asset control and risk disclosure conditions. Additionally, spot crypto-based exchange-traded funds (ETFs) have been available since 2024.

The comprehensive integration aims to synchronize market infrastructure, meeting the expectations of institutional investors while centralizing activities within an auditable framework. The legislative roadmap through 2026 plans to consolidate licensing standards and security into a unified system.

Concrete progress underway in Hong Kong’s crypto market includes:

• Implementation of OTC trading licensing schemes.
• Authorization of staking services for licensed platforms.
• Launch and operationalization of crypto-based ETFs since 2024.

“Hong Kong is set to become a leading center for cryptocurrency innovation and regulation, thanks to our proactive policies and strategic regulations,” stated an official involved in the initiative.