Hong Kong is solidifying its position as a leading global digital asset hub, implementing robust new regulatory measures to combat fraud and bolster investor protection. The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) have recently proposed a new licensing regime for over-the-counter (OTC) virtual asset trading services, following extensive public consultation.
This initiative, operating under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), directly targets previously unregulated OTC platforms and physical shops that have been implicated in high-profile scams, such as the JP-EX fraud in 2023. The proposed framework mandates that any person carrying on a business of providing virtual asset dealing services – including spot trading, VA-to-fiat conversion, and brokerage activities – must obtain a license from the SFC. This move aims to bring previously opaque operations into a transparent, regulated environment.
Complementing the OTC framework is the landmark Stablecoins Ordinance, which was officially passed on May 21, 2025, and is set to become effective on August 1, 2025. This ordinance establishes a comprehensive licensing regime for fiat-referenced stablecoin issuers, mandating stringent requirements such as full reserve backing, robust redemption guarantees, and strict anti-money laundering (AML) and counter-financing of terrorism (CFT) obligations. This positions Hong Kong at the forefront of global stablecoin regulation, attracting significant interest from institutions, with several already expressing intent to apply for licenses.
These proactive measures collectively address growing concerns over money laundering and systemic financial instability within the virtual asset space. By extending regulatory oversight to OTC services and setting clear standards for stablecoins, Hong Kong aims to enhance market integrity and align its virtual asset sector with existing financial regulatory frameworks. Entities already regulated by the SFC or the Hong Kong Monetary Authority (HKMA) will generally be integrated into this harmonized approach.
While the Stablecoins Ordinance currently emphasizes a tiered approach, allowing offering of specified stablecoins issued by an unlicensed person primarily to professional investors, the overall regulatory push strengthens Hong Kong's ambition to become a responsible yet innovative crypto hub. Stakeholders are keenly awaiting the HKMA’s upcoming detailed guidelines, expected this month, as well as the issuance of initial stablecoin licenses by year-end, which will further shape the landscape of digital finance in the region.
Hong Kong's strategic regulatory evolution seeks to strike a crucial balance between fostering innovation and ensuring robust oversight for a sustainable digital asset ecosystem.
July 2025, Cryptoniteuae