Invest1 publisher2 min readPublished
Hong Kong's year-end crypto bill extends licensing to dealers, custodians, advisers and managers
Hong Kong plans four new licensing regimes for crypto dealing, custody, advisory and management in a bill due before the end of 2026. The bill still has to pass the Legislative Council and no start date has been reported, so a 2027 licensing deadline is, for now, each firm's own estimate.
The Investor · Invest desk
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What happened
- Crypto dealing would follow parts of the Type 1 securities dealing framework, with the SFC licensing and supervising firms that carry out covered dealing.
- Custody licensing targets firms that safeguard clients' private keys, with controls to protect customer property set out in the December 2025 consultation conclusions.
- The bill sits beside regimes already running: covered exchanges serving Hong Kong need SFC authorization, and stablecoin issuers are licensed under a separate framework.
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Why it matters
- cost Crypto advisers and fund managers in Hong Kong will have to budget for the compliance load that a local securities adviser or asset manager already carries.
- exposure A custodian that loses client keys in Hong Kong would answer to the SFC as a licensee as well as to its customers.
- constraint A platform or stablecoin license may not cover a group's separate dealing, custody, advisory or management business once the new regimes apply.
The dealing and custody consultation opened in June 2025, and the FSTB and SFC published their conclusions on Dec. 24 before moving to legislative drafting [10]. Christopher Hui, the Secretary for Financial Services and the Treasury, told the Legislative Council's Finance Committee on Oct. 5 that the amendment bill would be introduced this year [2]. By then drafting had run for more than nine months [16]. An introduction before the end of 2026 [1] would leave roughly 18 months between the first consultation and the first look lawmakers get at a bill [17]. It must then pass through the Legislative Council before any regime takes effect [3]. The one 2027 date in the record belongs to the regulator: the SFC plans tighter custody surveillance as new digital asset monitoring tools arrive during that year [9].
Hong Kong is not writing a crypto rulebook from scratch. Regulators developed the proposals under a principle they put as "same business, same risks, same rules" [7]. The statute is the odd part. Confirming the advisory and management results in May, the FSTB and SFC said they would finalize the legislative proposals under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance [12]. So licenses copied from securities categories will sit inside an anti-money-laundering law [6] [12].
The advisory and management consultation closed in January 2026 with 51 responses [11], against more than 190 for dealing and custody [10], a ratio above 3.7 to 1 [18]. The advisory and management proposals drew support, and the May conclusions moved them onto the same legislative timetable as dealing and custody [15]. Response counts are a crude gauge of exposure, but they place dealing and custody where firms expect the bill to cost the most.
The bill can reach lawmakers by December [1] and pass with a short runway for firms, in which case a 2027 licensing plan looks sensible. Passage can also drag, and the plan becomes a 2028 one. Or the dealing exemptions, which regulators have considered modeling on those in conventional securities markets [5], can come out wide enough that the cost lands mainly on crypto-native firms. I'd budget for the first case. The SFC has encouraged existing and prospective advisory and management providers to contact it before the law takes effect so they can prepare applications [13]. I take that as a sign it expects applications soon after passage, though the counter-thesis is that early contact is routine supervisory practice and says nothing about dates. The view is wrong if the first licenses under the bill are not issued until 2028.
What to watch
- The date the amendment bill is actually tabled, and how long the Legislative Council takes to pass it.
- The commencement date and any transition period the bill text sets for firms already dealing, holding keys, advising or managing crypto in Hong Kong.