20th October, 2026
By Shubhii Verma
Hong Kong banks, cryptocurrency firms, and asset managers could be forced to suspend virtual-asset services if they fail to obtain licences before proposed regulations take effect, lawyers have warned.
The government said in May it was finalising separate licensing requirements for virtual-asset dealing, custody, advisory, and management services under the Securities and Futures Commission (SFC). Legislation is targeted before year-end.
Proposed Hong Kong Crypto Licensing Rules Raise Compliance Concerns
Emily Rumble, a senior lawyer at Gibson, Dunn & Crutcher, said licensed custodians would face demanding requirements covering private-key management, cybersecurity, and governance. Existing operators would not automatically receive exemptions or permission to continue affected services while applications were reviewed.
William Hallatt, a partner at the firm, said banks and licensed asset managers currently rely on regulatory guidance and existing licence conditions to offer virtual-asset services. Proposed rules could also cover over-the-counter trading desks, brokers, and payment providers. Restrictions on unapproved trading platforms could encourage some firms to relocate overseas.
Isabella Wong, a financial-services partner at Deacons, said asset managers might need separate licences to manage virtual assets, even when holdings represent less than 10% of their portfolios. Firms could need qualified personnel and revised procedures, while recruiting experienced responsible officers may delay implementation.
Minny Siu, a partner at King & Wood, said custody providers could need stronger cybersecurity, technology, and internal controls. Some businesses may instead use licensed custodians or trading platforms. However, Kristi Swartz, a partner at DLA Piper Hong Kong, warned that outsourcing would not remove responsibility for anti-money-laundering compliance.
Crypto Advisory Rules Could Affect AI Platforms and Influencers
The proposed advisory rules could also cover artificial-intelligence investment platforms recommending cryptocurrencies or offering model portfolios, alongside paid online influencers promoting virtual assets. Overseas companies actively marketing these services to Hong Kong customers might also require licences. Swartz advised foreign firms to review their websites, advertising, and customer restrictions.
Blockwind News ANALYSIS
Blockwind News Analysis: Impact of Hong Kong Crypto Regulations
Hong Kong’s proposed framework signals a shift toward tighter oversight of digital assets. Although stronger safeguards could improve investor confidence, separate licences and compliance costs may disadvantage smaller operators. Some may partner with approved providers, while others could move abroad.
The critical question is whether implementation balances investor protection with market access. Clear definitions, realistic transition periods, and timely guidance will matter, particularly for AI platforms and influencers whose activities may cross the line into regulated advice.
Licensing alone cannot eliminate crypto-related risks. Regulators must ensure that rules are enforceable without unnecessarily pushing legitimate activity offshore. Until legislation is finalised, businesses should prepare for possible changes without treating proposals as settled law.
