9th July, 2026
By Shubhii Verma
Hong Kong Regulators Discuss Virtual Asset Compliance Updates
Hong Kong’s securities industry has urged the Securities and Futures Commission (SFC) to refine its virtual asset regulatory framework by reducing compliance costs, simplifying licensing requirements, and providing clearer guidance for businesses operating in the digital asset sector.
The recommendations were put forward by the Securities and Futures Professionals Association following a meeting with Hong Kong financial regulators, including Under Secretary for Financial Services and the Treasury Chan Ho-lim and representatives from the SFC’s Intermediaries Division. The discussions focused on improving the city’s regulatory environment while maintaining strong investor protection.
One of the key proposals involves changes to the Virtual Asset Platform Practitioner Examination (CVAP). The association welcomed the SFC’s willingness to improve the qualification process by separating the examination from mandatory training courses, publishing official study materials, and lowering examination fees. Regulators also indicated that candidates may eventually be allowed to take the exam without first completing compulsory coursework, making it easier for professionals to enter the industry.
Industry Calls for Flexible Wallet and Insurance Rules
Despite these positive developments, several regulatory issues remain unresolved. Industry participants are seeking clearer guidance on self-custody rules for private equity funds, virtual asset payment services, and the distinction between technology providers and companies conducting regulated financial activities.
The association also expressed concerns over rising compliance costs faced by licensed virtual asset trading platforms. It argued that some regulatory requirements—including rules governing cold and hot wallet allocations, insurance coverage, hardware encryption, and on-chain transfer procedures—could be made more flexible without compromising investor safety. According to the group, reducing unnecessary operational burdens would help licensed firms remain competitive while encouraging further growth of Hong Kong’s digital asset ecosystem.
Market participants have also requested greater clarity regarding licensing obligations, permitted business activities, and asset allocation rules. They noted that several provisions under the new framework remain broad, creating uncertainty for businesses planning to expand into Hong Kong’s crypto market.
Another major topic was the regulatory treatment of technology companies serving the digital asset industry. The association called for clearer distinctions between businesses that simply provide software or blockchain infrastructure and those that directly handle customer assets or financial transactions. It argued that technology providers should not automatically require financial licenses if they do not engage in regulated investment activities.
Expanding Crypto Investment Products for Retail Investors
The industry is also encouraging regulators to accelerate the approval of additional cryptocurrency investment products, including crypto derivatives. Currently, retail investors in Hong Kong can trade only five approved cryptocurrencies and are limited to long-only positions. Expanding product offerings would provide investors with more sophisticated risk management tools while strengthening Hong Kong’s position as a global digital asset hub.
The association said it will continue working with regulators through policy discussions and compliance initiatives as Hong Kong further develops its virtual asset regulatory framework.
