A Comprehensive Understanding of Hong Kong's Virtual Asset Regulatory Framework and Related Licenses

Abstract

1. Hong Kong Virtual Asset Related Policies

From the "Anti-Money Laundering and Terrorist Financing (Amendment) Ordinance" to the "Stablecoin Ordinance," the regulatory framework for virtual assets in Hong Kong is continuously improving. In October 2022, the SFC issued a declaration on "Policies for the Development of Virtual Assets in Hong Kong," stating that "virtual asset innovation can thrive sustainably in Hong Kong." In June 2023, the "Anti-Money Laundering and Terrorist Financing (Amendment) Ordinance" came into effect, emphasizing that Virtual Asset Trading Platforms (VATP) must operate with a license. In March 2024, the Hong Kong Monetary Authority launched a sandbox for stablecoin issuers, aiming to communicate regulatory expectations to institutions intending to issue fiat stablecoins in Hong Kong and gather participants' opinions on proposed regulatory requirements. In April 2024, Asia's first virtual asset spot ETFs were launched in Hong Kong. In February 2025, the SFC released the "ASPIRe" roadmap, planning 12 key measures around five core pillars: connectivity, security, products, infrastructure, and relationships, to build a safer, more innovative, and open virtual asset market. In June 2025, the Hong Kong government released the "Hong Kong Digital Asset Development Policy Declaration 2.0," proposing the "LEAP" framework, reaffirming its commitment to making Hong Kong a global innovation center in the digital asset field. In May 2025, the Hong Kong Legislative Council passed the "Stablecoin Ordinance Draft" and published it, with the "Stablecoin Ordinance" set to take effect in August 2025.

2. Hong Kong Virtual Asset Service Related Licenses

In December 2022, the Hong Kong SAR Legislative Council passed the "2022 Anti-Money Laundering and Terrorist Financing System (Amendment) Ordinance Draft," introducing a new licensing system for "Virtual Asset Service Providers (VASP)," which stipulates that any business providing virtual asset services must apply for a license from the Hong Kong Securities and Futures Commission. This license officially came into effect on June 1, 2023, and can be combined with existing Class 1, 4, 7, and 9 licenses to provide virtual asset-related services—VASP combined with Class 1 license can provide virtual asset trading services; combined with Class 1 and 7 licenses can obtain VATP licenses to operate virtual asset trading platforms; combined with Class 4 license can provide advice on virtual assets; combined with Class 9 license can invest 10% or more of the total asset value in virtual assets.

3. Hong Kong Stablecoin Related Policies

The "Stablecoin Ordinance" is the result of a complete legislative process that has gradually improved over three and a half years and will take effect in August 2025. In January 2022, the HKMA released a discussion paper on "Cryptographic Assets and Stablecoins," outlining the regulatory framework for cryptographic assets, particularly stablecoins used for payment purposes; in December 2023, a consultation paper was released, clarifying the regulatory direction for stablecoin issuers; in March 2024, a regulatory sandbox for stablecoins was launched to test practical application scenarios; In July 2024, the consultation conclusion will be published to determine the legislative direction; on May 21, 2025, the Legislative Council passed the "Stablecoin Regulation Draft" in the third reading, which will take effect in August. After the "Stablecoin Regulation" comes into effect, anyone issuing fiat stablecoins in Hong Kong during business operations, or issuing fiat stablecoins claiming to be pegged to the value of the Hong Kong dollar in Hong Kong or outside of Hong Kong, must apply for a license from the Hong Kong Monetary Authority.

Before the formal regulation is issued, the Hong Kong Monetary Authority launched a stablecoin sandbox in March 2024, with a total of 3 groups of institutions currently in the sandbox. Before the implementation of the regulatory system for stablecoin issuers, the Hong Kong Monetary Authority, through the sandbox, collects participants' opinions on the proposed regulatory requirements to ensure that the system design meets regulatory objectives. For sandbox participants, they can test the feasibility of their expected business models and communicate directly with the Monetary Authority to understand how to comply with future regulatory requirements. According to the Hong Kong Monetary Authority, there are currently three groups of stablecoin sandbox institutions: JD Coin Chain Technology (Hong Kong) Limited, Yuan Coin Innovation Technology Limited, and Standard Chartered Bank (Hong Kong) + Anxin Group + Hong Kong Telecommunications Joint Venture Company, all of which entered the sandbox on July 18, 2024.

Main Text

I. Hong Kong's Virtual Asset Related Policies

From the "Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance" to the "Stablecoin Regulation," the regulatory framework for virtual assets in Hong Kong is continuously improving. In October 2022, the SFC issued a declaration on "Policies for the Development of Virtual Assets in Hong Kong," stating that "virtual asset innovation should thrive sustainably in Hong Kong." In June 2023, the "Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance" came into effect, emphasizing that virtual asset trading platforms (VATP) must operate with a license. In March 2024, the Hong Kong Monetary Authority launched a stablecoin issuer sandbox aimed at conveying regulatory expectations to institutions intending to issue fiat stablecoins in Hong Kong and collecting participants' opinions on proposed regulatory requirements. In April 2024, Asia's first virtual asset spot ETFs were launched in Hong Kong. In February 2025, the SFC released the "ASPIRe" roadmap, planning 12 major measures around five core pillars: connectivity, security, products, infrastructure, and engagement, to build a safer, more innovative, and open virtual asset market. In June 2025, the SAR government released the "Hong Kong Digital Asset Development Policy Declaration 2.0," proposing the "LEAP" framework, reaffirming its commitment to making Hong Kong a global innovation center in the digital asset field. In May 2025, the Hong Kong Legislative Council passed the "Stablecoin Regulation Draft" and published it, which will take effect in August 2025.

II. Hong Kong Virtual Asset Service Related Licenses

In December 2022, the Legislative Council of the Hong Kong Special Administrative Region passed the "2022 Amendment Bill on Anti-Money Laundering and Terrorist Financing," introducing a new licensing system for "Virtual Asset Service Providers (VASP)." It stipulates that any business providing virtual asset services must apply for a license from the Hong Kong Securities and Futures Commission (SFC). Under the new system, central virtual asset trading platforms operating in Hong Kong must apply for licenses from the SFC in accordance with the Securities and Futures Ordinance (Cap. 571) and/or the Anti-Money Laundering Ordinance, establishing a dual licensing system. The introduction of the Anti-Money Laundering Ordinance marks a transition from a voluntary to a statutory licensing system for virtual asset exchanges in Hong Kong. Under this ordinance, the trading of non-security tokens will also be regulated. This system officially came into effect on June 1, 2023, and is one of the core systems for building a compliant framework for virtual assets in Hong Kong.

The Securities and Futures Commission (SFC) of Hong Kong has specified 13 types of regulated activities under the Securities and Futures Ordinance, among which Licenses 1, 4, 7, and 9 can be combined with the VASP license, allowing approved institutions to engage in related virtual asset businesses. Specifically, License 1 authorizes securities trading, License 4 authorizes the provision of advice on securities, License 7 authorizes the provision of automated trading services, and License 9 authorizes asset management.

2.1 Virtual Asset Trading Services: VASP + License 1 / Introducing Agent Model

The Hong Kong Securities and Futures Commission stipulates that intermediaries can only cooperate with licensed virtual asset trading platforms to conduct virtual asset trading services, with two specific approaches: one is to open a comprehensive account on the relevant platform to arrange for the provision of virtual asset trading services; the other is to introduce clients to the relevant platform, acting as an introducing agent for the virtual asset trading platform.

(1) Providing virtual asset trading services through comprehensive account arrangements: When the VASP license (Virtual Asset Service Provider license) is combined with the SFC's License 1 (Securities Trading License), institutions can simultaneously engage in trading of security tokens and non-security tokens. The VASP license alone can only trade non-security virtual assets (such as regular cryptocurrencies); when combined with License 1, it can cover security attribute tokens, thereby broadening the categories of virtual asset trading.

(2) Acting as an introducing agent for the virtual asset trading platform: According to the introducing agent model, the clients of the intermediary will establish a business relationship with the SFC-licensed platform and conduct transactions directly through that platform. The trading accounts on that platform will be opened in the name of the relevant clients Intermediaries should ensure that a written agreement is established with the licensed platform of the Securities and Futures Commission (SFC) to specify the responsibilities of both parties under the introduction arrangement.

As of July 16, 2025, a total of 43 institutions have been approved to provide virtual asset trading services through comprehensive account arrangements, with 19 institutions approved to provide virtual asset trading services through comprehensive account arrangements. Among them, Guotai Junan Securities (Hong Kong) Limited, Yuan Universe Securities Limited, Dasheng Securities Limited, China Merchants International Securities Limited, Nanhua Securities Investment Limited, and Victory Securities Limited have been approved to operate two types of virtual asset trading services.

2.2 Operating Virtual Asset Trading Platforms: VASP + Type 1 License + Type 7 License

The VATP license (Virtual Asset Trading Platform Licence) is a specialized regulatory license established by the Hong Kong Securities and Futures Commission (SFC) for centralized virtual asset trading platforms, and it is a core subclass of the VASP (Virtual Asset Service Provider) license system. It requires platform operators to obtain approval for Type 1 (Securities Trading) and Type 7 (Automated Trading Services) licenses. As of July 16, 2025, 11 institutions have been approved for VATP licenses, and 9 institutions are in the application process. Among the applicants, NewBX Limited, Foris DAX HK Limited, Whalefin Markets Limited, and Flying Hippo Technologies Limited are the licensed applicants.

2.3 Providing Advice on Virtual Assets: VASP + Type 4 License

The Hong Kong Securities and Futures Commission and the Monetary Authority currently only intend to allow intermediaries regulated under Type 1 (Securities Trading) or Type 4 (Providing Advice on Securities) to provide advice on virtual assets. As of July 16, 2025, a total of 37 institutions have been approved

2.4 Managing Virtual Asset Investment Portfolios: VASP + License No.

The Hong Kong Securities and Futures Commission and the Monetary Authority currently only plan to allow intermediaries that meet the minimum exemption requirements and are licensed or registered for regulated activities under Type 9 (Asset Management) to provide asset management services for virtual assets. The minimum exemption requirement is that the stated investment objective of the portfolio is to invest in virtual assets, or intends to invest 10% or more of the total asset value of the portfolio in virtual assets. As of July 16, 2025, a total of 42 institutions have been approved.

III. Hong Kong Stablecoin Related Policies

3.1 Hong Kong "Stablecoin Ordinance"

The "Stablecoin Ordinance" is about to be implemented, and the regulation of the Hong Kong stablecoin market is becoming increasingly 完善。 On May 21, 2025, the Hong Kong Legislative Council officially passed the "Stablecoin Ordinance Bill." After the implementation of the "Stablecoin Ordinance," anyone who issues fiat stablecoins in Hong Kong during business operations, or issues fiat stablecoins claiming to be pegged to the value of the Hong Kong dollar in Hong Kong or outside of Hong Kong, must apply for a license from the Financial Management Commissioner. This ordinance will officially take effect on August 1, 2025.

The "Stablecoin Ordinance" is the result of a complete legislative process that has gradually improved over three and a half years. In January 2022, the HKMA released the "Discussion Paper on Crypto Assets and Stablecoins," outlining the Monetary Authority's regulatory framework for crypto assets, especially stablecoins used for payment purposes; in December 2023, a consultation paper was released, clarifying the regulatory direction for stablecoin issuers; in March 2024, a regulatory sandbox for stablecoins was launched to test practical application scenarios; in July 2024, consultation conclusions were published to determine the legislative direction; and on May 21, 2025, the Legislative Council passed the bill in the third reading, marking the entry of Hong Kong's stablecoin regulation into the implementation stage.

The "Stablecoin Ordinance" consists of 11 parts and 175 provisions, providing detailed explanations on the definition of stablecoins, licensing system, obligations of licensees, powers of the Monetary Authority, criminal offenses and penalties, and supervision mechanisms, among other contents. (See Chart 11)

3.2 Stablecoin Sandbox Institutions

Hong Kong launched a stablecoin issuer sandbox last year to promote the implementation of the stablecoin system. In the fintech sector, a sandbox mainly refers to a regulatory framework that allows financial institutions to test new services and products in a controlled and smaller-scale environment before launch, collecting data and user feedback to accelerate the rollout of related products and services while ensuring compliance with regulatory requirements. On March 12, 2024, the Hong Kong Monetary Authority (HKMA) launched the stablecoin issuer sandbox, aiming to convey regulatory expectations to institutions intending to issue fiat stablecoins in Hong Kong and gather participants' opinions on the proposed regulatory requirements.

The stablecoin sandbox can not only provide guidance for regulation but also help issuers test business feasibility. Before the implementation of the stablecoin issuer regulatory system, the HKMA can use the sandbox to communicate regulatory expectations and provide guidance to institutions planning to issue fiat stablecoins in Hong Kong, as well as collect participants' opinions on the proposed regulatory requirements to ensure that the system design meets regulatory objectives. For sandbox participants, they can test the feasibility of their expected business models and communicate directly with the HKMA to understand how to comply with future regulatory requirements.

According to publicly available information from the HKMA, there are currently three groups of stablecoin sandbox institutions: JD Coin Chain Technology (Hong Kong) Co., Ltd., Yuan Coin Innovation Technology Co., Ltd., and Standard Chartered Bank (Hong Kong) + Anni Group + Hong Kong Telecommunications Joint Venture. All entered the sandbox on July 18, 2024.

IV. Related Stock Analysis

1. Related to stablecoin applicants: Yuan Coin Technology related (ZhongAn Online, Baishida Holdings, etc.), JD Group-SW, Standard Chartered Group, Ant Group (Yaocai Securities Finance, etc.), domestic state-owned enterprises, etc.;

2. Hong Kong virtual asset exchanges (holding VATP licenses): OSL Group, HKE Holdings, Lianlian Digital, Futu Holdings, Tiger Brokers, Puxing Energy (holding Hashkey);

3. Downstream applications of stablecoins: Yika, Lianlian Digital, Jinyong Investment (in cooperation with AnchorX);

4. Related to RWA: Fubo Group, Lianyi Rong Technology-W, Delin Holdings, Yisou Technology, Yunfeng Finance;

5. Upgrading license No. 1, connecting to virtual asset trading: Guotai Junan International, Victory Securities, China Merchants Bank, First Shanghai, Fosun International, Jieli Trading Treasure, Futu Holdings, Tiger Brokers;

6. Holding virtual assets: Boya Interactive, Huaxing Capital Holdings, Mi Strategy, Hengyue Holdings, Blueport Interactive;

7. Traditional cryptocurrency assets: New Fire Technology Holdings, OK Blockchain, Xiong'an Technology.

The main viewpoints of this article are derived from the report "Understanding Hong Kong's Virtual Asset Regulatory Framework and Related Licenses" published by Yi Yongjian and Chai Mengting of Guojin Securities on July 22, with some edits by Wallstreetcn Risk Warning and Disclaimer

The market carries risks, and investment should be approached with caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk