OTC Dealers and Custodians of Virtual Assets in Hong Kong: the 2026 Bill with No Transitional Period — How Not to Stop Your Business on the Day the Law Commences

Licensing of OTC virtual asset dealers and licensing of virtual asset custodians in Hong Kong are two new regimes that the Government has committed to introducing into the Legislative Council in a dedicated bill before the end of 2026, as amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615). The defining feature of both regimes, stated expressly in the consultation conclusions of 24 December 2025, is the absence of a transitional period: there will be neither a “deeming arrangement” (a provisional licence while an application is being considered) nor a non-contravention period of the kind trading platforms enjoyed in 2023–2024. The regimes will commence on a date fixed by the Government, and from that date anyone who carries on a business of buying and selling virtual assets for clients, or of safekeeping their private keys, without an SFC licence must stop operating. The entry threshold is already known: paid-up share capital of HK$5,000,000 for a dealer and HK$10,000,000 for a custodian, plus liquid capital (up to HK$3,000,000 for a dealer and HK$3,000,000 for a custodian), at least two responsible officers, a Hong Kong company or a registered branch of a foreign company, and custody of client assets only with an SFC-licensed custodian.

Important. As at 21 September 2026 the bill has not been introduced into the Legislative Council: the LegCo bills database contains no instrument on the licensing of virtual asset dealers, custodians, advisers or managers, and the most recently gazetted bill is dated 14 July 2026. The Government has consistently confirmed its target of introducing the bill in 2026: on 24 December 2025 (“in 2026”), on 25 February 2026 in the Budget (“we will introduce a bill this year”), and on 26 May 2026 and in its paper for the Panel on Financial Affairs of 1 June 2026 — by then as a single bill on all four regimes “within this year”. The commencement date will be set separately, “taking into account the time market participants need to adjust their business models”, but the SFC and the FSTB have warned expressly that those who do not start pre-application engagement early “will have to stop operations on the commencement date”.

The legal framework: which instruments and documents define the regime as at September 2026

The legal framework for licensing virtual asset dealers and custodians in Hong Kong consists of a statute already in force — Part 5B of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), into which the new regimes will be inserted — and a set of Government documents from 2025–2026 that determine the content of the forthcoming bill. Every document below is in force or officially published as at September 2026; the February 2024 consultation of the Financial Services and the Treasury Bureau (FSTB) on licensing OTC trading through the Customs and Excise Department is mentioned only as an abandoned approach.

The key distinction in the level of certainty: everything concerning the existing trading platform regime (Part 5B, sanctions, fees, custody standards) is confirmed by the text of the statute and the guidelines; everything concerning dealers and custodians is confirmed by official consultation conclusions and Government statements, but the final wording, amounts and commencement date will appear only in the text of the bill and the subsequent SFC rules. Wherever a figure below comes from the consultation documents, that is stated expressly.

What a VA dealing service is, and who will need an OTC dealer licence

A VA dealing service is, under the final definition in paragraph 3 of the consultation conclusions of 24 December 2025 (here and below, paragraph numbers of the dealing conclusions refer to Section A), “making or offering to make an agreement with another person, or inducing or attempting to induce another person to enter into or offer to enter into an agreement, with a view to acquiring, disposing of, subscribing for or underwriting VAs”. The definition is modelled on Type 1 (dealing in securities) under the Securities and Futures Ordinance and applies to anyone carrying on such activity by way of business in Hong Kong or actively marketing it to the Hong Kong public.

Three typical business models fall within the definition. The first is the OTC shop: physical outlets and online services that buy virtual assets from a client, or sell them to a client, for Hong Kong dollars, renminbi or another currency. The second comprises brokers and aggregators that execute client orders to buy and sell virtual assets through their own or third-party venues. The third is VA-to-VA conversion services: the custodian consultation paper states expressly (paragraph 2.29) that a custodian wishing to provide “conversion of a VA to another VA or fiat or vice versa, or spot trade of any VA” must also obtain a licence under the dealing regime unless an exemption applies; for anyone else such conversion for clients falls within the general definition of dealing (paragraph 3 of the conclusions). This is a fundamental difference from the abandoned 2024 approach, under which licensees would not have been permitted to provide VA-to-VA conversion (paragraph 2.12 of the 2024 paper).

The second limb (limb (b)) of the original definition — agreements “the purpose or pretended purpose of which is to secure a profit from the yield of VAs or by reference to fluctuations in the value of VAs” — has been removed (paragraph 5 of the conclusions). Such products — derivatives, structured products, futures on virtual assets — remain within the Securities and Futures Ordinance (Types 1, 2 and 11), with no dual licensing. Under paragraph 6 of the conclusions, the definition of “virtual asset” in section 53ZRA of Cap. 615 expressly excludes securities and futures contracts, so dealers working solely in tokenised securities fall outside the new regime and are regulated under the SFO. Peer-to-peer transactions between individuals with no intermediary (paragraph 2.10 of the consultation paper) and decentralised services are assessed on “the substance of the service provided” (paragraph 8 of the conclusions).

The practical consequence for Russian-speaking entrepreneurs: a Hong Kong company that exchanges USDT for Hong Kong dollars for clients, takes orders to buy bitcoin “on request” or matches buyers and sellers for a commission becomes, from the commencement date, either a licensed dealer or an offender under a future provision modelled on section 53ZRD of Cap. 615 (parity of sanctions is promised in paragraph 45 of the conclusions), with a maximum penalty of HK$5,000,000 and seven years’ imprisonment. Today such activity outside a trading platform is not licensed under Part 5B of Cap. 615 (unless the service runs through electronic facilities where counterparties are matched and client money or assets come into its possession — such facilities are already a VA exchange under Schedule 3B), and it is precisely this gap that the Government is closing. One caveat concerns stablecoins: since 1 August 2025, under section 9 of the Stablecoins Ordinance (Cap. 656), only “permitted offerors” — HKMA-licensed issuers, banks, Type 1 licensed corporations, SFC-licensed platforms and SVF licensees — may offer any fiat-referenced stablecoin, including USDT, in the course of business, and stablecoins of unlicensed issuers may be offered only to persons specified by the Financial Secretary (professional investors); a breach is punishable on indictment by a fine of HK$5,000,000 and 7 years’ imprisonment. An exchange shop publicly offering USDT to retail clients is at risk already — regardless of the future dealing regime.

What a VA custodian service is, and who will become a licensed custodian

A VA custodian service is, under paragraph 6 of the consultation conclusions of 24 December 2025, the activity of “custodians which safekeep any instrument enabling the transfer of VAs for any person”; the consultation paper spells out that such an instrument means “private keys (or similar instruments such as smartcards, authentication credentials)”. The regime is deliberately narrowed to a single core of risk: control over clients’ private keys (paragraph 7).

Who must be licensed is set out in paragraph 35 of the conclusions in a non-exhaustive list: the associated entities of licensed trading platforms that today hold platform clients’ keys; corporations licensed for Type 13 (fund depositaries), banks and stored value facility (SVF) operators that safekeep virtual assets; and fund managers that hold the keys to fund assets themselves (subject to a possible exemption for new tokens). Banks are registered with the SFC after consultation with the HKMA, which remains their frontline supervisor; subsidiaries of locally incorporated banks are licensed by the SFC directly.

Who does not need a licence is equally clear: providers of non-custodial wallets where only the client holds the keys (paragraph 14); technology providers and group companies that support the infrastructure but do not safekeep keys (paragraphs 15–16); “top-layer” trustees and managers that have delegated custody to a licensed custodian (paragraph 8); lawyers and accountants holding backup copies of keys (paragraph 33), and bank vaults and security companies storing encrypted or de-activated backups (paragraph 2.22 of the consultation paper); clerical staff and staff in corporate functions — HR, finance, legal, compliance (paragraph 24). There is a single criterion: a licence is required where the provider “can unilaterally transfer its clients’ VAs”; decisions on MPC arrangements and providers of “partial” keys are made case by case — a licence may be required where the client cannot unilaterally transfer the assets or reconstruct the complete key without the provider’s support (paragraph 11).

An HKMA-licensed stablecoin issuer is exempt from the custodian licence only if it safekeeps for clients solely the stablecoins it has itself issued (paragraph 34). Safekeeping any other virtual assets requires a separate SFC licence. Likewise, custodians of tokenised securities are outside the regime, because the definition of virtual asset in Cap. 615 does not cover securities (paragraph 12); such a custodian falls under the SFO only as a fund depositary (Type 13) or as an intermediary or its associated entity holding client securities.

One further rule, in paragraph 32 of the conclusions, changes the market more than the regime itself: the SFC “will require via regulation” that VA service providers — above all dealers — hold client assets only with SFC-regulated custodians. In other words, the custodian licence becomes the bottleneck of the whole ecosystem: without a Hong Kong licensed custodian a dealer cannot lawfully hold client assets, and overseas custodians, even those regulated in other jurisdictions, are not recognised at the initial stage (paragraph 26 of the dealing conclusions).

Where the bill stands on 21 September 2026, and what is already known about timing

The status of the bill as at 21 September 2026 is “details being formulated, introduction targeted within 2026”; the Legislative Council bills database lists no instrument on the licensing of virtual asset dealers, custodians, advisers or managers, and the most recently gazetted bill is the Huanggang Port Hong Kong Port Area Bill of 14 July 2026. This means that no public text of the future amendments to Cap. 615 exists, and every substantive point below rests on the official consultation conclusions and Government statements.

The chronology of official commitments runs as follows. On 27 June 2025 the FSTB and the SFC published two consultation papers with responses due by 29 August 2025. On 10 September 2025, in reply to a Legislative Council question (LCQ10), the Government said it was “formulating details of the licensing regimes” and would “announce the legislative timetable in due course”. On 24 December 2025 the conclusions on dealers (101 submissions) and custodians (93 submissions) were published with the target of “introducing a bill into the Legislative Council in 2026”, and a one-month consultation on advisers and managers was launched the same day. On 25 February 2026 the 2026-27 Budget named a bill on dealer and custodian licensing among the year’s measures. On 26 May 2026 the conclusions on advisers and managers (51 submissions) were published with the wording “finalising the legislative proposals for the regulatory regimes for VA dealing, custodian, advisory and management service providers, with a target of introducing the relevant bill into the Legislative Council within this year”. On 1 June 2026 the Panel on Financial Affairs received an FSTB paper with the same commitment and the addition that “upon completion of the relevant legislative work, the SFC will formulate the relevant codes and guidelines”. On 16 September 2026 the 2026 Policy Address committed in paragraph 49 to “enhance virtual-asset licensing regimes and formulate specific regulatory guidelines to map a clear compliance pathway for virtual-asset service providers”.

No commencement date has been fixed: under paragraph 32 of the dealing conclusions and paragraph 49 of the custodian conclusions, the Government and the SFC will determine it “taking into account the time market participants need to adjust their business models”. The previous cycle offers a planning benchmark: the trading platform amendments (Ord. No. 15 of 2022) were passed on 7 December 2022, gazetted on 16 December 2022, and the licensing requirement in section 53ZRD commenced on 1 June 2023 — five and a half months after gazettal. If the bill is introduced in autumn 2026 and passes the Legislative Council in the first half of 2027, commencement in the second half of 2027 is a realistic but by no means guaranteed scenario; this is the author’s assessment, not an official timetable.

The Legislative Council’s autumn session traditionally opens in October, and a bill must be gazetted before it is introduced — so the first official signal will be the gazettal of the bill (often preceded by a paper for the relevant LegCo panel describing the draft). UPPERSETUP monitors the LegCo bills database and the Gazette on this subject; for the current state of all four regimes as a whole, see Licensing Virtual Asset Service Providers in Hong Kong 2026: Dealers, Custodians, Advisers, and Managers.

Why there is no transitional period, and how this differs from the 2023 trading platform regime

The absence of a transitional period means that the new regimes will offer neither a “deeming arrangement” — an automatic provisional licence for existing operators that have applied — nor a non-contravention period during which one may operate without a licence. Paragraph 31 of the dealing conclusions leaves no ambiguity: “We do not plan to grant a deeming arrangement to existing VA dealing service providers as it could create confusion over regulatory status and may not be optimal for investor protection. The licensing regime will take full effect on the commencement date of the relevant statutory provisions.” Paragraph 48 of the custodian conclusions repeats the same position word for word for custody.

The contrast with 2023 is fundamental. When the licensing requirement of Part 5B of Cap. 615 commenced for trading platforms on 1 June 2023, existing platforms received a 12-month non-contravention period to 31 May 2024, the right to apply by 29 February 2024, and a “deemed licence” from 1 June 2024 pending the SFC’s decision; those that did not apply had to wind down by 31 May 2024 (SFC circular of 31 May 2023). The abandoned February 2024 proposal to license OTC trading through the Customs and Excise Department also provided for a six-month transitional period with two options — “apply within three months or close by the end of the fourth” or a deemed licence for applicants. None of this is on offer in 2026.

The regulators’ reasoning is set out in paragraph 30 of the dealing conclusions (respondents’ views were “divided”) and in more detail in paragraph 45 of the custodian conclusions: half of the respondents supported the absence of deeming for the sake of a “level playing field” and early engagement with the SFC, while the other half asked for 3 to 18 months to restructure. The regulators chose a hard date but offset it with three mechanisms. The first is a deferred commencement date, to be set with regard to the time needed to adjust (paragraphs 32 and 49). The second is pre-application engagement: the SFC “will walk pre-applicants through the licensing process” (paragraph 33 of the dealing conclusions), and for custodians “including on engaging an external assessor” (paragraph 50). The third is an expedited approval process for those already assessed by the SFC or the HKMA: licensed trading platforms and their associated entities, licensed corporations and registered institutions already providing VA dealing or custody, and banks and their subsidiaries (paragraphs 35–36 of the dealing conclusions, paragraph 51 of the custodian conclusions).

The regulators’ warning is explicit: providers that do not contact the SFC or the HKMA for pre-application “may suffer undue business disruptions, as they will have to stop operations on the commencement date” (paragraph 34 of the dealing conclusions, paragraph 52 of the custodian conclusions). For an operating OTC business this shifts the question from “will we manage to apply in time” to “will we manage to be licensed in time”: without a licence in hand on the commencement date, continuing to operate is a criminal offence.

Who is exempt from the dealer and custodian licences: five expected exemptions

Exemptions from the dealing regime are the situations in which transactions in virtual assets do not require a dealer licence; under paragraph 10 of the conclusions of 24 December 2025 such exemptions are “under consideration”, and their precise wording will appear in the bill. The list under consideration: transactions conducted through SFC-regulated VA dealers; transactions conducted as principal (for one’s own account); intra-group transactions; the use of virtual assets by a purchaser of goods or a user of services as a means of payment; and dealing performed by an SFC-regulated VA manager solely for the purpose of providing management services. Separately, under paragraph 11, HKMA-licensed stablecoin issuers are exempt in respect of their regulated stablecoin activity (the consultation paper referred to the primary market).

Two exemptions call for caution. The exemption for “transactions conducted as principal” looks at first sight like a loophole for an OTC shop that formally buys and sells from its own inventory; but under the SFO the equivalent principal exemption for dealing in securities does not operate in relation to retail clients, and the conclusions state expressly that the regime will “largely align” with Type 1. In the author’s assessment, one cannot count on retail exchange “from one’s own pocket” remaining outside the licence until the bill is published. The payment-use exemption protects the purchaser paying for goods in stablecoins, not the merchant acquirer that accepts and converts such payments for a fee: paragraph 27 of the conclusions separately promises to “further consider” the requirements for dealers serving payment models — that is, in the author’s assessment, it treats them as licensable.

Exemptions from the custody regime are framed through a single criterion — the absence of control over private keys. No licence is needed by those who do not safekeep keys (paragraph 32); group companies, lawyers and accountants holding backups (paragraph 33), bank vaults and security companies storing encrypted or de-activated backups (paragraph 2.22 of the consultation paper); stablecoin issuers in respect of their own stablecoins (paragraph 34); providers of non-custodial wallets (paragraph 14); and possibly private equity and venture funds self-custodying new tokens “up to a limited threshold” (paragraph 33 — still under consideration). Custody of tokenised securities lies outside the regime (paragraph 12); such a custodian falls under the SFO only as a fund depositary (Type 13) or as an intermediary or its associated entity holding client securities.

What a licensed OTC dealer will need: capital, structure, custody and execution

The requirements for a licensed VA dealer are a set of conditions that, in the wording of the conclusions, “largely align” with those for Type 1 licensed corporations under the SFO, supplemented by specific rules on the custody and execution of transactions in virtual assets. Below are the parameters recorded in the consultation papers and conclusions; figures from the 2025 documents are flagged as such.

Legal form. Under paragraph 2.14 of the consultation paper the applicant must be “(i) a locally incorporated company with a permanent place of business in Hong Kong, or (ii) a company incorporated elsewhere but registered in Hong Kong under the Companies Ordinance”. This is the same construction as for trading platforms under the existing section 53ZRK of Cap. 615: a licence may be granted to a “company” under Cap. 622 or a registered non-Hong Kong company. In practice this means a choice between a Hong Kong subsidiary and a registered branch of a foreign company; the incorporation of a Hong Kong company is described in Hong Kong Company Registration 2026: Requirements, Procedure, Taxes, and Annual Compliance. UPPERSETUP sets up the Hong Kong company or branch for the licensing structure — with a registered address, a company secretary and ongoing support — under its Business Setup in Hong Kong: Company Registration & Accounting Services offering.

People. Under paragraph 2.16, at least two responsible officers approved by the SFC are required — or two executive officers approved by the HKMA for banks; under the existing section 53ZRK(6), for platforms at least one RO must be “available at all times” to supervise the business, and the same rule can be expected to apply to dealers. The fit and proper test (paragraph 2.15) covers the company, its directors, substantial shareholders and ultimate owners and takes into account convictions for money laundering, terrorist financing and “serious offences” in any jurisdiction. How the SFC assesses responsible officers for Types 1–9 is explained in SFC Licences Types 1–9 in Hong Kong in 2026: Responsible Officers, the MIC Regime, Capital and Competence.

A dealer’s financial resources under paragraph 29 of the conclusions: a minimum paid-up share capital of HK$5,000,000 and a minimum required liquid capital of up to HK$3,000,000 depending on the business model; the consultation paper (paragraph 2.25(a)) added excess liquid capital equivalent to at least 12 months of actual operating expenses. The SFC “retains flexibility” to impose additional requirements according to the scale of the business.

Custody and execution. Under paragraph 26 of the conclusions the SFC “will require that VA dealers custody client VAs with SFC-regulated VA custodian service providers” — overseas custodians, even those meeting BCBS, IOSCO and FATF standards, are not admitted at the outset. On execution the regulators left the question open: today Type 1 licensed corporations execute VA transactions through an omnibus account with an SFC-licensed platform (Joint circular of 22 December 2023; since 30 September 2025 also through the off-platform services of licensed platforms), while for overseas platforms and liquidity providers not licensed by the SFC no admission has been expressly promised: paragraphs 17–18 of the conclusions point to the ASPIRe roadmap and the platforms’ shared order books as “a first step”, and the SFC is “actively reviewing” its requirements for dealers, to be calibrated in pre-application engagement; the “reservations regarding enforceability, regulatory oversight and investor protection” were expressed in paragraph 26 in relation to overseas custodians. What the SFC undertook to “further consider” are the requirements applicable to dealers themselves, in light of payment facilitation and short-term settlement models (paragraph 27). The pre-funding requirement is retained as a tool against settlement risk but will be calibrated in pre-application engagement (paragraph 18). Access to overseas liquidity has already been opened by the regulators — but through licensed platforms, not directly: under the SFC circular of 3 November 2025 on shared liquidity, a licensed platform may, with the SFC’s prior written approval, operate a shared order book with an affiliated overseas platform licensed in a jurisdiction that is a member of the FATF or of a FATF-style regional body, subject to full pre-funding of orders, delivery-versus-payment settlement at least daily and a reserve fund in Hong Kong for client compensation; for a future dealer this means, in the author’s assessment, that global liquidity is reachable through an omnibus account with such a platform.

Retail and AML/CFT. For retail clients the consultation paper proposed limiting eligible assets to “tokens of high liquidity and stablecoins issued by issuers licensed by the HKMA”, following the trading platform model (paragraph 2.19). A dealer becomes a financial institution within the meaning of Schedule 1 to Cap. 615 with duties under Schedule 2 — customer due diligence, record-keeping and transfer-monitoring duties, including the travel rule and blockchain analytics (paragraphs 2.23–2.24).

What a licensed custodian will need: HK$10,000,000, keys in Hong Kong and an external assessor

The requirements for a licensed VA custodian are built on the existing requirements for custody of client assets by trading platforms (Chapter X of the Guidelines for Virtual Asset Trading Platform Operators) and on the Type 13 regime under the SFO for fund depositaries; paragraph 44 of the conclusions promises expressly that the SFC “will build upon the regulations established for VATPs” when formulating the requirements.

A custodian’s financial resources under paragraph 42 of the conclusions: a minimum paid-up share capital of HK$10,000,000 and a minimum required liquid capital of HK$3,000,000; banks are exempt from these requirements as entities subject to the HKMA’s capital rules. The SFC reserves the right to raise the requirements for large custodians “with reference to the scale of business”.

Organisation and people. The legal form is the same as for a dealer: a Hong Kong company or a registered branch with a permanent place of business; at least two responsible officers, and under the consultation paper all executive directors of a custodian must be approved as responsible officers. Everyone with “direct access to private keys or the authority to initiate or approve VA transfers”, multi-signature participants, persons with access to key generation, storage or recovery systems, and senior management must be licensed as representatives (paragraph 25 of the conclusions); group company personnel performing such functions must be accredited to the Hong Kong custodian (paragraph 27). Clerical staff performing routine tasks under established procedures, and staff in HR, finance, legal and compliance, do not need a licence (paragraphs 23–24).

Operational standards. The existing VATP Guidelines require 98% or more of client virtual assets to be held in cold storage, insurance or compensation coverage of at least 50% of assets in cold storage and 100% of those in hot storage, client assets to be held through an associated entity on trust, and the key infrastructure to be located in Hong Kong (Chapter X of the VATP Guidelines; summarised by Clifford Chance on 31 May 2023 following the SFC consultation). These are supplemented by the SFC circular of 15 August 2025 on custody of virtual assets: a responsible officer or Manager-in-Charge accountable for custody, offline generation and backup of keys in certified HSMs, air-gapped devices and address whitelists for cold wallets, due diligence on third-party wallet solutions with independent code reviews, 24/7 threat monitoring and reconciliation of on-chain balances with the ledger, and training of signers against “blind signing”; the SFC stated expressly that these standards “will also constitute core expectations for the providers of Virtual Asset Custodian Services”. For custodians the SFC promises a “dynamic approach to custody technologies and storage ratios” (paragraph 38 of the conclusions) instead of a rigid 98/2, but these standards remain the starting point. Staking is permitted provided custodians “implement robust safeguards”, as for platforms (paragraph 37); there will be no restriction on the types of assets held, subject to proper token due diligence including ML/TF risk assessment (paragraph 40). The regulators have undertaken to consider third-party transfers for payment service providers separately.

External assessor. Under the consultation paper a custodian that safekeeps private keys must engage an external assessor, with the SFC “becoming a party” to the engagement — the model applied to trading platforms. In UPPERSETUP’s experience this is the most time-consuming element of preparation: the assessment of policies, procedures, systems and controls must be completed before the licence is granted, and the market has a limited number of assessors with VATP project experience. The cyber-resilience requirements for critical infrastructure that may affect large custodians are described in Hong Kong’s First Cybersecurity Statute: Cap. 653, the Eight Critical Infrastructure Sectors and the 12- and 48-Hour Reporting Clocks.

What a licence costs: SFC fees, capital and the price of delay

The cost of a licence is made up of government fees, which the conclusions tie to existing SFC rates, capital requirements, and spending on infrastructure, assessors and staff. The SFC fees for the new regimes have not yet been set — the bill will fix them separately — but the benchmarks are named: for dealers “the licence application fee and annual fee … will be benchmarked with the relevant fees for Type 1 regulated activity” (paragraph 38 of the conclusions), and for custodians “no less than the current amounts applicable to Type 3 regulated activity” (paragraph 54).

In sum: a dealer’s government fees are comparable with a Type 1 licence — HK$4,740 per application and HK$4,740 a year for the corporation plus HK$2,950 for the approval of each responsible officer and HK$4,740 a year for each; for a custodian the benchmark is 27 times higher — not less than HK$129,730 per application and the same annually. The real cost is driven not by fees but by capital (HK$5,000,000 or HK$10,000,000 must be paid up and evidenced), liquid capital that must be maintained monthly under rules analogous to the Securities and Futures (Financial Resources) Rules, and custody infrastructure. UPPERSETUP prepares financial statements, liquid capital computations and SFC-standard audits as part of its Accounting Support for Companies service.

The price of delay is calculated differently. If there is no licence on the commencement date, the business stops; each day of continued operation after that date — under section 53ZRD(5) of Cap. 615, which currently applies to platforms and with which parity has been promised — adds HK$100,000 a day to the maximum fine of HK$5,000,000 on conviction on indictment. For an OTC shop turning over tens of millions of Hong Kong dollars a month, a three-to-four-month pause until a licence is obtained is, in the author’s assessment, usually more expensive than the entire cost of preparation.

Sanctions: which provisions of Cap. 615 will apply to dealers and custodians

The sanctions for unlicensed dealers and custodians are, under paragraph 45 of the dealing conclusions and paragraph 61 of the custodian conclusions, “aligned with those under the existing regime for VATPs” to “maintain parity and ensure consistency, deterrence and fairness”. This allows the future sanctions to be described by the existing text of Part 5B of Cap. 615 and the consultation papers (paragraph 2.39 of the dealing paper, paragraph 2.51 of the custodian paper) rather than by conjecture.

The territorial reach of the regimes is wider than that of ordinary Hong Kong licences: under paragraphs 40–41 of the dealing conclusions and paragraphs 55–57 of the custodian conclusions it is prohibited to “actively market” the relevant services to the Hong Kong public, “whether in Hong Kong or elsewhere”, without an SFC licence or registration, and the SFC will clarify the scope of “actively market” in separate guidance covering online advertising and social media. For platforms such a rule already applies: section 53ZRB(3)–(4) of Cap. 615 treats actively marketing to the Hong Kong public services that would constitute a VA service if provided in Hong Kong as carrying on a business of providing that service. For overseas OTC services with a Russian-speaking audience in Hong Kong this means that frequent calls to Hong Kong investors, media programmes and Internet activities targeting the Hong Kong public, a detailed marketing plan, direct mailing and advertisements in local media, and services “packaged” for the Hong Kong public (for example, written in Chinese and denominated in Hong Kong dollars) — the factors the SFC lists in its FAQ on “actively markets” under section 115 of the SFO and section 53ZRB of the AMLO — may in themselves become grounds for prosecution. Appeals against SFC and HKMA decisions will go to the Anti-Money Laundering and Counter-Terrorist Financing Review Tribunal, which already operates under Cap. 615 (paragraphs 47–48 and 62–64).

Comparing the regimes: the existing platform, the future dealer, the future custodian and the abandoned 2024 proposal

Comparing the regimes shows how the dealer and custodian licences under the 2026 bill differ from the existing trading platform licence and from the abandoned 2024 approach through the Customs and Excise Department. The figures for platforms come from instruments in force; for dealers and custodians from the consultation conclusions of 24 December 2025 and the consultation papers of 27 June 2025; for the 2024 proposal from the FSTB consultation paper of 8 February 2024.

How the new licences relate to the MSO licence, SFC Type 1 licences and stablecoins

The relationship with other licences is the question of whether a licence a company already holds covers the future requirements; in almost every case the answer is no: existing status brings only an expedited process or a narrow exemption.

A Money Service Operator (MSO) licence under Part 5 of Cap. 615 covers currency exchange and remittance, and virtual assets are not currency within the definition of “money changing service” (the exchange of currencies) in Schedule 1 to Cap. 615: a bureau with an MSO licence that has added buying and selling bitcoin to its currency exchange is today carrying on an activity not licensed under Part 5B of Cap. 615, and after commencement an activity licensed by the SFC; for USDT and other fiat-referenced stablecoins the restriction has applied since 1 August 2025 — their public offering is permitted only to permitted offerors under section 9 of Cap. 656, which do not include MSOs. The Customs and Excise Department, which licenses MSOs, will have no role in the new regimes — unlike under the 2024 proposal. The MSO licence itself is covered in The Money Service Operator (MSO) licence in Hong Kong in 2026: who needs one, what it costs, the Customs & Excise competence test and the AMLO sanctions.

An SFC Type 1 licence “uplifted” for VA dealing under the Joint circular of 22 December 2023 is the only case where existing status helps: such corporations will qualify for the expedited approval process (paragraph 36 of the conclusions), but they will still have to obtain the dealer licence; the adviser and manager conclusions of 26 May 2026 expressly rejected an exemption for Type 4 licensees whose VA advice is “wholly incidental” to RA4 (paragraph 21), and, in the author’s assessment, the same logic will be applied to Type 1 and Type 9.

Licensed trading platforms will also have to obtain a dealer licence — “irrespective of whether they engage in off-platform transactions” (paragraphs 2.12 and 2.30 of the consultation paper), but through the expedited process (paragraphs 35–36 of the conclusions); their associated entities that hold clients’ keys are named first in paragraph 35 of the custodian conclusions among future licensed custodians — also with expedited treatment. A stablecoin issuer licence under Cap. 656 exempts only dealing in the issuer’s own stablecoins within its regulated stablecoin activity and custody of its own stablecoins alone; trading third-party tokens or holding bitcoin for clients requires SFC licences. The stablecoin regime is already operating: on 10 April 2026 the HKMA granted the first two licences — to Anchorpoint Financial Limited and The Hongkong and Shanghai Banking Corporation Limited — out of 36 applications filed in the initial application period (LCQ6 of 10 June 2026), and the SFC circular of 27 May 2026 allowed licensed platforms and corporations to provide services in such “Relevant Stablecoins” without the liquidity and index requirements, without the knowledge assessment for clients receiving only such services, and without counting them towards exposure limits — subject to prior written notification to the SFC. For a future OTC dealer this means that exchanging a regulated stablecoin for Hong Kong dollars for clients remains dealing that requires an SFC licence — the exemption applies only to the issuer itself. How the stablecoin regime itself works is explained in The Hong Kong Stablecoin Issuer Licence: A Full Breakdown of the Stablecoins Ordinance (Cap. 656) in 2026.

Tax is a separate layer: a licence does not change the fact that a dealer’s profits from trading virtual assets are charged to profits tax as trading profits, and the “trading vs capital” question is decided under DIPN 39; see Taxation of Digital Assets in Hong Kong in 2026: DIPN 39, Trading vs Capital and Section 14. Banking for a licensable business remains a task of its own: Hong Kong banks open accounts for VA companies selectively, and a filed SFC application is usually a precondition for the conversation; the options are described in Corporate Bank Accounts in Hong Kong for Non-Residents 2026: Traditional Banks, Virtual Banks, and Fintech.

Who is already ready: 13 platforms, their associated entities, banks and licensed corporations

The already licensed participants are those to whom the SFC and the HKMA have promised an expedited process: according to the SFC’s list, last updated on 29 May 2026, Hong Kong has 13 licensed trading platforms (from OSL Exchange, licensed on 15 December 2020, to Bixin.com, licensed on 18 May 2026), 6 applicants, including 3 with a deemed licence, and no platforms closing down. The associated entities of these platforms that hold keys, banks and their subsidiaries, and Type 1 licensed corporations already providing VA dealing under the Joint circular will enter the new regimes through the expedited process. The advantage of associated entities was reinforced by the SFC circular of 3 November 2025 on the expansion of platforms’ products and services: by modifying their licensing conditions with the SFC’s approval they may already custody for their clients, through an associated entity, digital assets that are not traded on the platform itself (platforms without a completed second-phase external assessment — tokenised securities only for now), thereby building precisely the operational track record a future licensed custodian will need.

For everyone else — OTC shops without an SFC licence, brokers working through overseas exchanges, custody start-ups — there is no expedited process, and it is precisely they who bear the main risk of a shutdown. The author’s assessment: the less regulatory history a company has in Hong Kong, the earlier it needs to begin pre-application engagement, because the SFC will have to assess the owners’ fit and proper status, the sources of capital and the control systems from scratch.

How long it takes to obtain a licence: lessons from the platforms and a practical timeline

The time needed to obtain a licence under the new regimes is fixed neither by statute nor by the consultation documents — the SFC is not bound by a processing deadline, and the only empirical benchmark comes from the experience of trading platforms. That experience is discouraging for anyone planning to start preparing after the bill is gazetted.

Of the six applicants for a trading platform licence on the SFC’s list as at 29 May 2026, three (Crypto.com, WhaleFin and Matrixport HK, the last of which, according to the SFC’s note, has already ceased business) have held a deemed licence since 1 June 2024 on applications filed in February 2024 — that is, their applications have been under consideration for more than two years. Of the 13 licensed platforms, the first two (OSL and HashKey) were licensed under the SFO regime back in 2020 and 2022, and most of the others in December 2024 or later, a year and a half after Part 5B commenced. For dealers and custodians, who will have no deemed licence, this means that an application filed on the commencement date will most probably take longer to process than the business can afford to stand idle.

The timings in the third column are UPPERSETUP’s practical benchmarks from licensing projects in Hong Kong, not statutory periods; they depend on the readiness of documents, the owners’ jurisdiction and the regulator’s workload. Only what appears in the fourth column is officially established. In total, in UPPERSETUP’s assessment, even working in parallel, a dealer’s application rarely takes less than six months to prepare, and a custodian’s less than nine; that is exactly why the consultation conclusions repeat the call for early engagement so insistently.

Step-by-step: preparing from self-assessment to the commencement date

The licensing preparation process is a sequence of steps that allows a dealer or custodian licence to be obtained before, not after, the commencement date of the regime. The clock starts today, not on the day the bill is gazetted: the SFC’s pre-application engagement is already open, and capital, staff and an assessor cannot be arranged in a month.

1.       Determine which of the four regimes touch the business. Buying and selling VAs for clients, including VA-to-VA conversion, is dealing; control over clients’ private keys is custody; recommendations and signals are advice; discretionary management is management, with no de minimis threshold. One company may need two or more licences.

2.       Check whether an existing licence or an exemption covers the activity. Tokenised securities fall under the SFO, not the new regime; VA derivatives under Types 1, 2 and 11; a licensed issuer’s own stablecoins under Cap. 656; a non-custodial wallet outside the custody regime. Apply the principal and intra-group exemptions only once the bill is published.

3.       Choose the form of presence. A Hong Kong company (usually a private company limited by shares) or registration of a foreign company under Part 16 of Cap. 622 with a permanent place of business; for banks, registration via the HKMA. Set up the structure in advance: fit and proper is tested on ultimate owners, and changing the structure mid-application sets the process back.

4.       Secure the capital. Pay up share capital of HK$5,000,000 (dealer) or HK$10,000,000 (custodian), prepare the liquid capital computation of up to HK$3,000,000 and a 12-month operating expense reserve; evidence the source of funds — for the ultimate owner review this is the key document.

5.       Hire two responsible officers. Candidates must pass the fit and proper test and demonstrate experience in VAs and traditional finance; for a custodian, identify everyone with access to keys and authority over transfers — they need representative licences.

6.       Settle the custody question. A dealer must hold client assets with an SFC-licensed custodian: sign a preliminary agreement with a prospective custodian (a platform’s associated entity, a bank) or plan its own custodian licence with separate capital of HK$10,000,000. A custodian must design cold storage, multi-signature, insurance and key generation in Hong Kong to the Chapter X standards of the VATP Guidelines.

7.       Build compliance under Schedule 2 to Cap. 615. CDD, transaction monitoring, the travel rule, blockchain analytics, sanctions screening, JFIU reporting; appoint a compliance officer and an MLRO.

8.       Begin pre-application engagement with the SFC (or the HKMA for banks). The SFC has promised to “walk pre-applicants through the licensing process” (paragraph 33 of the dealing conclusions), and for custodians “including on engaging an external assessor” (paragraph 50); for a custodian, sign the external assessor engagement with the SFC as a party.

9.       Prepare the application pack on the VATP licensing model: business plan, policies and procedures, organisation chart, system descriptions, assessor reports, particulars of owners, directors and ROs; budget the fees (benchmarks: HK$4,740 for a dealer, not less than HK$129,730 for a custodian, HK$2,950 per RO).

10.    File the application immediately after the statutory provisions on applications commence — or earlier, if the SFC opens applications before the regime’s commencement date (for platforms, applications were accepted from the regime’s commencement date, 1 June 2023).

11.    Draw up a continuity plan in case the licence is not obtained by the commencement date:suspension of new transactions, return of client assets, client notifications, cessation of active marketing. Continuing to operate without a licence is a criminal offence from day one.

12.    After the licence is granted, diarise the annual fee, audited accounts within 4 months after the financial year end (s. 53ZSC for platforms — the same rule can be expected), monthly liquid capital returns, and notifications of changes in ROs and owners.

Legal analysis of which regimes apply, structuring the group to meet the fit and proper requirements and support in pre-application engagement with the SFC are part of UPPERSETUP’s legal and strategic consulting; for incorporating a Hong Kong company or registering a branch ahead of the licence, see the Catalog of company registration solutions.

Common mistakes of OTC dealers and custodians preparing for a regime with no transitional period

A typical mistake in this area is a decision taken by analogy with 2023, when trading platforms had a year to adapt, or with the abandoned 2024 proposal and its six-month transition. Neither analogy works in 2026.

1.       Waiting for the bill to be gazetted “to see the text”. Five and a half months passed between the gazettal of the platform amendments and the commencement of Part 5B; in that time it is impossible to pay up capital, hire two ROs, complete an external assessment and go through SFC processing. The regulators have warned expressly that those who have not started pre-application “will have to stop operations on the commencement date”.

2.       Counting on a deeming arrangement. There will be none — paragraph 31 of the dealing conclusions and paragraph 48 of the custodian conclusions. An application filed on the commencement date confers no right to operate pending its consideration.

3.       Assuming that an MSO licence covers cryptocurrency exchange. An MSO licence is currency exchange and remittance under Part 5 of Cap. 615; virtual assets are not currency. A bureau with an MSO licence and bitcoin on the counter is, after commencement, an unlicensed dealer facing up to HK$5,000,000 and 7 years, and with USDT on the counter it is already today in breach of section 9 of Cap. 656 with the same maximum penalty.

4.       Relying on the “as principal” exemption. The wording of the exemptions will appear only in the bill; the regime is aligned with Type 1, where the equivalent exemption does not help when dealing with retail clients. Treat retail exchange “from own inventory” as licensable until the text is published.

5.       Planning custody with an overseas custodian. Paragraph 26 of the conclusions: dealers will be required to hold client assets with SFC-licensed custodians; custodians regulated abroad are not recognised at the outset. Without a Hong Kong custodian partner a dealer cannot launch.

6.       Underestimating a custodian’s capital. HK$10,000,000 paid-up plus HK$3,000,000 liquid capital is the minimum, and the SFC may raise the requirements with reference to the scale of business. The capital must be paid up before the application, not “after approval”.

7.       Forgetting the licensing of a custodian’s staff. Everyone with access to keys or authority to approve transfers, including staff of overseas group companies, must be licensed or accredited to the Hong Kong licensee (paragraphs 25–27 of the conclusions). Unlawfully performing a regulated function carries up to HK$1,000,000 and 2 years under section 53ZRD(6).

8.       Continuing active marketing from abroad after commencement. The prohibition covers offering services to the Hong Kong public “whether in Hong Kong or elsewhere”; advertising to a Hong Kong audience without a licence is the same offence as operating without one.

9.       Treating the stablecoin licence as universal. It exempts only dealing in and custody of the issuer’s own stablecoins; exchanging third-party tokens or holding bitcoin requires SFC licences.

10.    Having no shutdown plan. If the licence is not obtained by the commencement date, a pre-prepared scenario is needed: a freeze on new transactions, return of assets, notifications. Improvising on that day is a direct route to client claims and SFC attention.

Who a Hong Kong dealer or custodian licence suits, who it does not, and when a professional review is needed

A dealer licence suits OTC shops and brokers with turnover that justifies HK$5,000,000 of capital and up to HK$3,000,000 of liquid capital, two responsible officers and full compliance under Schedule 2 to Cap. 615; companies that need lawful access to Hong Kong retail clients and banks; groups that already hold a Type 1 licence with a VA uplift or a licensed platform — they will go through the expedited process. The arguments in favour: a clear benchmark of requirements (Type 1), fees at the HK$4,740 level, recognition of the licence by banks and counterparties, and a single jurisdiction with trading platforms and stablecoins.

A custodian licence suits the associated entities of platforms, banks and their subsidiaries, Type 13 depositaries and large technology custodians ready for HK$10,000,000 of capital, an external assessment, licensing of staff and key infrastructure in Hong Kong. Paragraph 32 of the conclusions adds the economic rationale: all dealers will be required to hold assets precisely with SFC-licensed custodians, so demand for the service is created by the law itself.

It does not suit small exchange bureaux for which the capital and the recurring costs of ROs, compliance and audit exceed the margin; services whose model relies on client anonymity or overseas custodians; start-ups that count on “launching first and licensing later” — with no transitional period that model does not exist; and companies without a Hong Kong presence that merely advertise to a Hong Kong audience — they will either have to be licensed or cease marketing.

A professional review is essential if: it is unclear whether the activity is dealing, custody, advice or management (for example, “signals” in a Telegram channel, merchant acquiring in stablecoins, MPC wallets); the group counts on the principal, intra-group or payment-use exemption; the ultimate owners or directors have a regulatory history in other jurisdictions; a combination of licences is planned (dealer + custodian, Type 1 + dealer, stablecoin + dealer); or the company already operates in Hong Kong and must decide which operations to stop or restructure before the commencement date. UPPERSETUP carries out this analysis — identifying the applicable regime, testing the exemptions and preparing for pre-application engagement with the SFC — as part of its legal and strategic consulting. The personal liability of directors of licensed companies is described in Directors’ Duties and Liabilities under the Companies Ordinance (Cap. 622) in Hong Kong in 2026: the Statutory Duty of Care, Fiduciary Principles, Fines, Personal Liability and Disqualification, and the visa routes for relocating responsible officers in Hong Kong Work and Relocation Visas 2026: GEP, the Top Talent Pass, the Entrepreneur Route, Dependants and Permanent Residence After Seven Years.

FAQ: dealer and custodian licences for virtual assets in Hong Kong

Has the bill on licensing OTC dealers and custodians of virtual assets in Hong Kong been introduced yet?

As at 21 September 2026 — no. The Legislative Council bills database contains no instrument on the licensing of virtual asset dealers, custodians, advisers or managers; the most recently gazetted bill is dated 14 July 2026. On 24 December 2025, 26 May 2026 and 1 June 2026 the FSTB and the SFC confirmed the aim of introducing a single bill covering all four regimes within 2026 as amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).

Will there be a transitional period for OTC exchange shops and custodians already operating?

No. Paragraph 31 of the dealing consultation conclusions and paragraph 48 of the custodian conclusions (24 December 2025) state that the regulators “do not plan to grant a deeming arrangement” and that “the licensing regime will take full effect on the commencement date of the relevant statutory provisions”. Instead of a transitional period there will be a deferred commencement date allowing time to adapt, pre-application engagement with the SFC and an expedited procedure for companies already licensed by the SFC or the HKMA. Those without a licence by that date “will have to stop operations on the commencement date”.

How much capital is required for a VA dealer licence and a VA custodian licence in Hong Kong?

According to the consultation conclusions: a dealer — minimum paid-up share capital of HK$5,000,000 and minimum liquid capital of up to HK$3,000,000 depending on the business model (the consultation paper added a 12-month operating expense reserve); a custodian — paid-up capital of HK$10,000,000 and liquid capital of HK$3,000,000, with banks exempt as entities subject to the HKMA’s capital rules. The SFC may raise the requirements according to the scale of the business.

What will the licence cost: which SFC fees will apply?

The exact fees will be set by the bill; the conclusions name the benchmarks: for dealers — the Type 1 fees (under Cap. 571AF today HK$4,740 per application and HK$4,740 per year for the corporation, HK$2,950 for approval of a responsible officer, HK$1,790 for a representative); for custodians — “no less than” the Type 3 fees (HK$129,730 per application and HK$129,730 per year). For comparison, a trading platform licence under Schedule 3C to Cap. 615 costs HK$4,740 per application and HK$4,740 per year.

Can an OTC dealer hold client assets on an overseas exchange or with an overseas custodian?

Under paragraph 26 of the conclusions — no: the SFC “will require that VA dealers custody client VAs with SFC-regulated VA custodian service providers”; custodians regulated overseas are not recognised at the initial stage. On executing trades through overseas platforms and liquidity providers not licensed by the SFC, no admission has been promised: paragraphs 17–18 of the conclusions refer to the shared order books of licensed platforms as “a first step”, and the SFC is reviewing its requirements for dealers, to be calibrated in pre-application engagement; today licensed corporations execute VA trades through SFC-licensed platforms.

Does an MSO licence cover exchanging cryptocurrency for Hong Kong dollars?

No. The Money Service Operator licence under Part 5 of Cap. 615 covers money changing and remittance; virtual assets are not currency. Exchanging bitcoin for Hong Kong dollars for clients after the regime commences will require a VA dealer licence from the SFC, and the Customs and Excise Department, which licenses MSOs, has no role in the new regime — unlike under the abandoned 2024 proposal. The public offering of USDT and other fiat-referenced stablecoins has, since 1 August 2025, been permitted only to permitted offerors under section 9 of the Stablecoins Ordinance (Cap. 656), which do not include MSOs.

What is the liability for acting as a dealer or custodian without a licence?

Sanctions are promised at parity with the existing trading platform regime: under section 53ZRD(5) of Cap. 615, carrying on a business of providing a VA service without a licence is punishable on indictment by a fine of HK$5,000,000 and imprisonment for 7 years plus HK$100,000 for each day the offence continues; on summary conviction — HK$500,000 and 2 years. Advertising an unlicensed provider — a fine at level 5 (HK$50,000) and 6 months; fraud in VA transactions — up to HK$10,000,000 and 10 years; a disciplinary pecuniary penalty for a licensee — up to HK$10,000,000 under the consultation papers.

What should an OTC exchange shop operating in Hong Kong do right now?

Determine which regimes affect the business; incorporate or confirm a Hong Kong structure (a company under Cap. 622 or a registered branch); pay up capital of HK$5,000,000 and document the source of funds; hire two responsible officers; contract with a future licensed custodian; build compliance under Schedule 2 to Cap. 615; begin pre-application engagement with the SFC; prepare a wind-down plan in case the licence is not in hand by the commencement date.

Are licensed stablecoin issuers exempt from the new regimes?

Only partially. Under paragraph 11 of the dealing conclusions, an HKMA-licensed issuer is exempt for its HKMA-regulated stablecoin activity, and under paragraph 34 of the custodian conclusions — for the custody of the stablecoins it has issued only. Dealing in other virtual assets for clients or holding other issuers’ tokens requires separate SFC licences.

Key takeaways

As at 21 September 2026 the bill on licensing OTC dealers and custodians of virtual assets in Hong Kong has not yet been introduced, but its content is already settled by the consultation conclusions of 24 December 2025 and 26 May 2026: four new regimes (dealing, custody, advisory, management) as amendments to Cap. 615 under SFC supervision, with the aim of introduction into the Legislative Council by the end of 2026. There will be no transitional period: no deeming arrangement and no non-contravention period; the regimes commence on the appointed date, and those without a licence must cease operations.

The entry threshold: a dealer — paid-up capital of HK$5,000,000 and liquid capital of up to HK$3,000,000; a custodian — HK$10,000,000 and HK$3,000,000; a Hong Kong company or a registered branch, at least two responsible officers, fit and proper owners, custody of client assets only with an SFC-licensed custodian, licensing of all staff with access to keys, an external assessor for custodians. Fees are benchmarked to Type 1 (HK$4,740) for dealers and no less than Type 3 (HK$129,730) for custodians; sanctions are at parity with the platforms: up to HK$5,000,000 and 7 years for operating without a licence.

The only protection against a business stoppage is early pre-application consultation with the SFC and the expedited procedure for those the regulators have already assessed: the 13 licensed platforms and their associated entities, banks, and Type 1 licensed corporations with a VA uplift. Everyone else must count from today, not from the date the bill is gazetted.

Summary

Hong Kong is introducing licensing for OTC dealers and custodians of virtual assets through amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615): according to the FSTB and SFC consultation conclusions of 24 December 2025 (101 and 93 submissions) and 26 May 2026, a single bill covering four regimes — dealing (modelled on Type 1 under the SFO), custody of private keys, advisory (Type 4) and management (Type 9) — is planned for introduction into the Legislative Council by the end of 2026; as at 21 September 2026 it has not been introduced. There will be no transitional period: no deeming arrangement is provided, the regimes commence on the date appointed by the Government, and those without a licence must cease operations; a deferred commencement date, pre-application engagement with the SFC and expedited approval for licensed platforms, banks and licensed corporations are envisaged. Requirements: a Hong Kong company or a registered branch, at least two responsible officers, fit and proper status; a dealer — paid-up capital of HK$5,000,000 and liquid capital of up to HK$3,000,000, custody of client assets only with an SFC-licensed custodian; a custodian — HK$10,000,000 and HK$3,000,000, licensing of staff with access to keys, an external assessor. Fees: the Type 1 benchmark (HK$4,740 per application and per year) for dealers and no less than Type 3 (HK$129,730) for custodians. Sanctions at parity with the trading platform regime: operating without a licence — up to HK$5,000,000 and 7 years plus HK$100,000 per day; advertising an unlicensed provider — HK$50,000 and 6 months; fraud — up to HK$10,000,000 and 10 years; disciplinary pecuniary penalty — up to HK$10,000,000 under the consultation papers. An MSO licence does not cover exchanging virtual assets; stablecoin issuers are exempt only for their own stablecoins, and since 1 August 2025 the public offering of fiat-referenced stablecoins has been permitted only to permitted offerors under section 9 of Cap. 656. Current as at September 2026.

Sources

Level 1 — legislation, regulators and government

1.       Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), section 53ZRD “Licence required for carrying on VA service business” — Hong Kong e-Legislation (text as at 21 September 2026).

2.       Cap. 615, section 53ZRA “Meaning of VA or virtual asset” — Hong Kong e-Legislation.

3.       Cap. 615, sections 53ZRE–53ZRG (advertising an unlicensed provider; fraud; reckless inducement) — Hong Kong e-Legislation.

4.       Cap. 615, section 53ZRK “Application for and grant of licence” and section 53ZSC (audited accounts) — Hong Kong e-Legislation.

5.       Cap. 615, Schedule 3B “VA Service” and Schedule 3C “Fees in relation to Part 5B” — Hong Kong e-Legislation.

6.       Securities and Futures (Fees) Rules (Cap. 571AF), Schedule 3 — Hong Kong e-Legislation.

7.       Criminal Procedure Ordinance (Cap. 221), Schedule 8 “Level of Fines for Offences” — Hong Kong e-Legislation.

8.       Stablecoins Ordinance (Cap. 656), section 9 “Offence related to offering specified stablecoin” — Hong Kong e-Legislation.

9.       Government welcomes passage of Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 (press release, 7 December 2022; commencement on 1 April and 1 June 2023)— Government of the HKSAR.

10.    FSTB and SFC launch consultation on legislative proposals for regulating digital asset dealing and custodian services (press release, 27 June 2025) — Government of the HKSAR.

11.    Public Consultation on Legislative Proposal to Regulate Dealing in Virtual Assets (consultation paper, June 2025) — FSTB.

12.    Public Consultation on Legislative Proposal to Regulate Virtual Asset Custodian Services (consultation paper, June 2025) — FSTB.

13.    FSTB and SFC publish consultation conclusions on legislative proposals for regulating virtual asset dealing and custodian services (press release, 24 December 2025) — Government of the HKSAR.

14.    Consultation Conclusions on Legislative Proposal to Regulate Dealing in VA (24 December 2025) — FSTB/SFC.

15.    Consultation Conclusions on Legislative Proposal to Regulate VA Custodian Services (24 December 2025) — FSTB/SFC.

16.    FSTB and SFC publish consultation conclusions on legislative proposals for regulating virtual asset advisory and management services (press release, 26 May 2026) — Government of the HKSAR.

17.    Consultation Conclusions on Legislative Proposal to Regulate VA Advisory Service Providers and VA Management Service Providers (26 May 2026) — FSTB/SFC.

18.    Legislative Council Panel on Financial Affairs — Development of Fintech in Hong Kong, LC Paper No. CB(1)530/2026(08) (1 June 2026) — FSTB / LegCo.

19.    Legislative Council — Bills (bills database; checked on 21 September 2026) — LegCo.

20.    LCQ10: Regulation of digital assets (10 September 2025) — Government of the HKSAR.

21.    The Chief Executive’s 2026 Policy Address (16 September 2026), paragraph 49(i) — Government of the HKSAR.

22.    Government launches consultation on legislative proposals to regulate over-the-counter trading of virtual assets (press release, 8 February 2024) — Government of the HKSAR.

23.    SFC — Lists of virtual asset trading platforms (updated 29 May 2026) — SFC.

24.    SFC — Guidelines for Virtual Asset Trading Platform Operators (June 2023) — SFC.

25.    SFC — Circular on transitional arrangements of the new licensing regime for virtual asset trading platforms (31 May 2023) — SFC.

26.    SFC/HKMA — Joint circular on intermediaries’ virtual asset-related activities (22 December 2023) — SFC.

27.    SFC/HKMA — Supplemental joint circular on intermediaries’ virtual asset-related activities (30 September 2025) — SFC.

28.    SFC — Circular to licensed virtual asset trading platform operators on custody of virtual assets (15 August 2025) — SFC.

29.    SFC — Circular on shared liquidity by virtual asset trading platforms (3 November 2025) — SFC.

30.    SFC — Circular on expansion of products and services of virtual asset trading platforms (3 November 2025) — SFC.

31.    SFC — Circular on provision of Relevant Stablecoin service by virtual asset trading platforms and licensed corporations (27 May 2026) — SFC.

32.    HKMA — Granting of stablecoin issuer licences (press release, 10 April 2026) — HKMA.

33.    LCQ6: Development and regulation of stablecoins (10 June 2026) — Government of the HKSAR.

34.    SFC — FAQ “Actively markets” under section 115 of the SFO and section 53ZRB of the AMLO (updated 31 May 2023) — SFC.

Level 2 — professional commentary

35.    Slaughter and May — Hong Kong progresses new licensing regimes for virtual asset dealing and custody; consults on regimes for virtual asset advisory and management (23 January 2026) — Slaughter and May.

36.    King & Wood Mallesons — Hong Kong’s Virtual Assets Licensing Regime: What lies ahead in 2026 (20 January 2026) — KWM.

37.    Mayer Brown (JSM) — Hong Kong’s regulatory framework for non-securities virtual assets: exchange, dealing, custody, advisory and management (2026) — JSM.

38.    Latham & Watkins — Hong Kong Forges the Final Links in Its Crypto Regulatory Chain (26 May 2026)— Latham & Watkins.

39.    Clifford Chance — Securities and Futures Commission finalises new regulatory requirements for VATP operators (31 May 2023) — Clifford Chance.

40.    KPMG China — SFC consultation conclusions and transitional arrangements for VATP operators (21 June 2023) — KPMG.

41.    KPMG China — Public consultation on legislative proposals to regulate over-the-counter trading of virtual assets (March 2024) — KPMG.

Disclaimer

This material is for information purposes only and does not constitute legal, tax, financial, investment or consulting advice. Before making any decision, obtain individual professional advice that takes into account your specific situation, jurisdiction, company status and the current requirements of the regulators. Current as at September 2026.