Hong Kong has emerged as one of Asia’s most progressive hubs for virtual asset innovation, blending regulatory clarity with financial infrastructure. On October 3, 2025, the Securities and Futures Commission (SFC) updated its official list of licensed virtual asset trading platforms, welcoming HKVAX as the third fully recognized exchange—joining OSL Exchange and HashKey Exchange. This milestone highlights Hong Kong’s structured approach to regulating digital asset markets while fostering compliance-driven growth.
But what does it actually take to legally operate a virtual asset exchange in Hong Kong? Is a Virtual Asset Trading Platform (VATP) license enough? Or are additional financial licenses required? Let’s break down the regulatory landscape, clarify key licensing requirements, and explore how businesses can navigate this evolving ecosystem.
Understanding Hong Kong’s Virtual Asset Licensing Framework
To lawfully operate a centralized virtual asset trading platform in Hong Kong, companies must comply with two core regulatory regimes:
1. The Securities and Futures Ordinance (SFO)
Applies when platforms deal with security tokens—digital assets that meet the legal definition of “securities.” Under the SFO, operators may need:
- Type 1 License: For dealing in securities (including security-like tokens).
- Type 7 License: For providing automated trading services via electronic platforms.
These licenses are mandatory if your platform facilitates trading of tokenized equities, asset-backed tokens, or other regulated digital securities.
2. The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO)
Covers platforms trading non-security virtual assets, such as Bitcoin and Ethereum. AMLO introduced the Virtual Asset Trading Platform (VATP) license, which allows operators to provide crypto-to-crypto or fiat-to-crypto exchange services—provided they meet strict AML/KYC, custody, and risk management standards.
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While these frameworks serve different purposes, the SFC strongly advises dual compliance. Why? Because a digital asset can shift from being a non-security to a security based on its use case or structure. Operating under both regimes ensures long-term regulatory resilience.
Current Licensed and Deemed-Licensed Platforms in Hong Kong
As of 2025, only three platforms have obtained formal VATP licenses:
- OSL Exchange (holds Type 1 & 7 licenses + VATP)
- HashKey Exchange (operated by Hash Blockchain Limited; holds Type 1 & 7 + VATP)
- HKVAX (holds Type 1 & 7 licenses)
However, several other platforms—including Crypto.com, WhaleFin, Matrixport HK, and Bullish—are operating under a "deemed licensed" status. This temporary arrangement allows them to serve professional investors only, with significant restrictions:
- ❌ No services to retail investors
- ❌ No margin trading or derivatives (e.g., futures contracts)
- ❌ No lending, staking, or market-making activities
This transitional phase gives firms time to meet full licensing requirements while protecting market integrity.
Core Financial Licenses for Virtual Asset Businesses
Beyond the VATP permit, here’s a breakdown of the main SFC licenses relevant to Web3 businesses:
| License Type | Key Function |
|---|---|
| Type 1 | Dealing in securities – essential for trading security tokens |
| Type 4 | Providing investment advice – required for crypto advisory services |
| Type 7 | Automated trading systems – nearly all exchanges need this |
| Type 9 | Asset management – allows fund managers to include crypto in portfolios |
Note: Firms like HashKey Group hold multiple licenses because they offer integrated services—trading, advisory, and fund management—under one ecosystem.
You don’t need every license. Only apply for those aligned with your business model.
Do You Need Type 1 and Type 7 Licenses to Get a VATP Permit?
Here's the critical insight: All three officially licensed exchanges—OSL, HashKey, and HKVAX—hold both Type 1 and Type 7 licenses in addition to their VATP permits.
This isn’t coincidental. The SFC expects platforms offering broad trading capabilities—especially those handling hybrid assets—to maintain comprehensive authorization. While the AMLO-based VATP license covers basic crypto trading, the SFO licenses ensure compliance when securities-like tokens enter the picture.
In short:
✅ If you’re only trading pure cryptocurrencies (like BTC/ETH), a VATP license may suffice during the deemed period.
✅ But to serve retail clients, expand into tokenized assets, or gain full market access, holding Type 1 and Type 7 licenses is practically essential.
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Expanding Your Scope: When You Need More Than Just Trading Licenses
If your vision extends beyond an exchange, consider these additional pathways:
Need Investment Advisory Services? Apply for Type 4 License
Whether you run a Telegram group giving crypto tips or operate a formal research firm, providing investment recommendations requires a Type 4 license. Unlicensed advice could lead to enforcement action.
Planning to Launch a Crypto Fund? You’ll Need Type 9
Asset managers who want to include Bitcoin, Ethereum, or other digital assets in their portfolios must obtain or upgrade to a Type 9 license. The advantage? A Type 9 holder can legally conduct securities trading and give investment advice without needing separate Type 1 or Type 4 licenses.
This makes the Type 9 license a strategic choice for firms aiming to build end-to-end wealth management solutions in Web3.
Frequently Asked Questions (FAQ)
Q: Can I operate a crypto exchange in Hong Kong without any license?
A: No. Any platform matching buy/sell orders for virtual assets and targeting Hong Kong users must either hold a VATP license or be in the process of applying for one.
Q: What’s the difference between a “licensed” and “deemed licensed” platform?
A: Only licensed platforms (like OSL and HashKey) can serve retail investors. Deemed-licensed platforms face restrictions and cannot offer high-risk products like derivatives or lending.
Q: Do I need a physical office in Hong Kong to apply?
A: Yes. The SFC requires licensed entities to have a registered office and key personnel based locally.
Q: How long does it take to get a VATP license?
A: Typically 6–12 months, depending on application completeness and engagement with regulators.
Q: Can I use my existing financial license for crypto operations?
A: Not automatically. You must notify the SFC and demonstrate that your systems, controls, and expertise cover virtual assets.
Q: Are stablecoins regulated in Hong Kong?
A: Yes. Stablecoins are under active review by the Financial Secretary. Issuers will likely face licensing requirements similar to e-payment providers or deposit-taking institutions.
Strategic Takeaways for Web3 Entrepreneurs
The Hong Kong regulatory environment rewards preparation and breadth of compliance. With only three fully licensed exchanges as of early 2025, early movers have a clear first-mover advantage. Firms that secure both SFO licenses (Type 1 & 7) and the VATP permit position themselves as trusted players eligible for retail access, banking partnerships, and institutional capital.
Moreover, integrating asset management (Type 9) or advisory (Type 4) capabilities creates diversified revenue streams and strengthens competitive moats.
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Final Thoughts
Operating a virtual asset exchange in Hong Kong isn’t just about getting a license—it’s about building a compliance framework that supports scalability, investor trust, and regulatory longevity. The path involves navigating both AMLO’s VATP regime and the SFO’s licensing system, particularly Types 1 and 7.
For entrepreneurs eyeing Asia’s gateway to global finance, Hong Kong offers unparalleled opportunity—but only to those who embrace regulation as part of their growth strategy.
Core Keywords: virtual asset exchange Hong Kong, VATP license, SFC licensing, Type 1 license, Type 7 license, crypto regulation Hong Kong, AMLO compliance, Web3 legal framework