Hong Kong's crypto bill could force unlicensed OTC desks and custodians to stop operating

The 87 days left in the year ^[17] count down to tabling, a deadline the government set for itself. Hui has held the end-2026 date since at least January, when he said regulators would bring a proposal before the year closed ^[13]. On Monday he said the government would submit the bill "within this year", according to a government statement cited by Cointelegraph ^[3], and he called it a response to "innovative developments" in financial technology ^[14]. Tabling only starts the legislative process. The government has not given a commencement date for the four regimes, and commencement is when an unlicensed firm's business is at risk ^[9].

That risk comes from one design choice. According to Crypto Briefing, the proposal has no transitional or grandfathering provisions, and businesses without an existing SFC or HKMA licence may be required to stop operating once the rules commence ^[9]. Centralised exchanges have been under SFC licensing since 2023 ^[11]. The new exposure sits with over-the-counter desks that match large buyers and sellers away from exchange order books, and with firms that hold private keys for clients ^[8]. Advisers and portfolio managers are covered as well ^[8]. The stated principle is "same business, same risks, same rules" ^[6], and each new licence lines up with a matching type under the Securities and Futures Ordinance ^[7]. I'd expect a manager already licensed under that ordinance to find the new application familiar.

Consultation responses clustered on the same two activities. Dealing and custody drew more than 190 responses against 51 for advisory and management ^[10], a ratio above 3.7 to one ^[18]. The dealing and custody conclusions came out on December 24, 2025, and the advisory and management ones on May 26, 2026 ^[10]. A late-December tabling would put about a year of drafting behind the first pair and about seven months behind the second ^[19].

The only licensing throughput in these sources comes from the stablecoin regime. The Stablecoins Ordinance took effect on August 1, 2025 ^[12], the HKMA had begun processing issuer applications by January ^[13], and it granted its first licences, to Anchorpoint Financial and the Hongkong and Shanghai Banking Corporation, in April ^[15]. The gap from commencement to the first two approvals was eight to nine months ^[16]. Two licences is a thin sample, and issuing stablecoins is a narrower business than OTC dealing.

The bill could be tabled by December as drafted and pass without a transition, leaving the cost with firms that waited. Lawmakers could instead add a transition period during scrutiny. Or tabling could slip into 2027, breaking a timetable Hui has repeated since January ^[13].

I think firms should plan for the first. The government has held more than 190 responses on dealing and custody since December 2025 ^[10], and the proposal it is preparing to table still contains no grandfathering ^[9]. The counter-case is that a long gap between passage and commencement would give firms the time that grandfathering does not, and nothing in the record rules that out. A tabled bill with a transitional clause, or a commencement date set a year or more after passage, would prove this view wrong.