As Hong Kong positions itself as a global hub for virtual assets, regulatory clarity has become a beacon for compliant innovation in the digital economy. With the Financial Services and Treasury Bureau (FSTB) releasing its Policy Statement on the Development of Virtual Assets in Hong Kong, confidence in the region’s fintech future is surging. Clear regulations mean certainty — and for businesses navigating the complex world of digital finance, that’s invaluable.
This guide breaks down the essential licensing requirements for operating a virtual asset platform in Hong Kong, focusing on the Securities and Futures Commission (SFC) framework, applicable license types, and strategic compliance considerations. Whether you're planning to launch a trading platform, manage crypto portfolios, or offer investment advice, understanding these rules is critical.
Understanding Virtual Assets Under Hong Kong Law
Before diving into licensing, it's crucial to define what qualifies as a virtual asset under Hong Kong regulation.
According to the SFC, a virtual asset is:
“A digital representation of value that can be digitally traded or transferred and used for payment or investment purposes.”
This includes:
- Cryptocurrencies (e.g., Bitcoin, Ethereum)
- Utility tokens
- Security tokens (those representing shares, debt, or other financial instruments)
- NFTs with investment features
- Other blockchain-based digital assets
However, not all virtual assets fall under SFC oversight. The key distinction lies in whether the asset constitutes a security or futures contract under the Securities and Futures Ordinance (SFO).
👉 Discover how to determine if your digital asset qualifies for regulated status in Hong Kong.
The SFC explicitly stated in its 2019 Position Paper on Regulating Virtual Asset Trading Platforms that platforms dealing only with non-securities virtual assets (like pure collectible NFTs or utility tokens without investment features) are outside its regulatory scope. Only platforms offering security-type virtual tokens — those with characteristics akin to stocks, bonds, or derivatives — must comply with SFC licensing.
The Core: SFC Regulated Activities and License Types
Hong Kong’s financial market is governed by a tiered licensing system based on 12 regulated activities defined under the SFO. While all 12 exist, only 10 are currently active. Each corresponds to a specific "Type" of license (e.g., Type 1, Type 4).
Here’s an overview of the most relevant licenses for virtual asset businesses:
Type 1: Securities Dealing
Permits firms to deal in securities — including security tokens — on behalf of clients or for their own account.
For virtual asset platforms listing tokenized equities or investment-grade digital assets, this license is mandatory.
Type 4: Advising on Securities
Allows providers to give professional investment advice about securities.
If your platform offers research reports, portfolio recommendations, or trading signals related to security tokens, you’ll likely need this license.
Type 7: Automated Trading Services
Covers the operation of electronic trading systems — essentially, running a digital exchange.
Any platform facilitating automated matching of buy/sell orders for virtual assets must hold this license.
Type 9: Asset Management
Required for managing portfolios involving securities or futures.
If your business includes managing client funds invested in virtual asset portfolios (even partially), this applies.
Note: Some licenses have “large” and “small” variants. For example, a "small Type 9" license restricts firms to private funds only, while a full ("large") license allows public fund management.
While Types 11 and 12 exist (for credit rating and over-the-counter derivatives), they’re not yet implemented and aren’t currently relevant to most virtual asset operations.
Which Licenses Do You Actually Need in Hong Kong?
Based on SFC guidance and real-world approvals, here’s what most compliant virtual asset platforms require:
Minimum Requirement: Type 1 + Type 7
Under the 2019 Position Paper, any platform offering trading in at least one security-type virtual asset must obtain both:
- Type 1 License: For securities trading
- Type 7 License: For operating an automated trading system
This combination was granted to OSL Digital Securities Limited, the first fully licensed virtual asset exchange in Hong Kong — setting a precedent for future applicants.
When You Also Need Type 9
If your platform provides portfolio management services — such as discretionary management of client crypto investments — then a Type 9 license becomes necessary.
Even if part of the portfolio consists of non-security virtual assets (like Bitcoin), the SFC may still impose regulatory conditions if the overall strategy involves securities.
Don’t Overlook Type 4
While not always mandatory, if your business model includes providing investment recommendations, market analysis, or advisory services tied to security tokens, you’re engaging in regulated activity under Type 4.
Many firms apply for Type 1 and Type 4 together to enable full-service brokerage capabilities.
👉 See how top-tier platforms integrate compliance with seamless user experience.
Important Compliance Realities
No “License Shopping” Allowed
You cannot simply acquire multiple licensed entities and stitch them together under one brand. The SFC requires a unified corporate structure with robust governance, risk controls, and internal compliance systems.
Acquiring an existing licensed entity is possible but heavily scrutinized. Most new entrants must establish a Hong Kong-incorporated legal entity — natural persons or decentralized autonomous organizations (DAOs) cannot hold licenses.
Open-Ended Licensing: A Major Advantage
In a significant move toward investor confidence, Hong Kong adopted an open-ended licensing regime in 2021. This means:
- Licenses do not expire
- No mandatory renewal cycles
- As long as the firm remains compliant and operational, the license remains valid
This policy acknowledges the substantial capital and technical investment required to build secure, scalable exchanges — and ensures regulatory stability for long-term growth.
Who Can Trade? The Professional Investor Framework
Even with full licensing, access is limited. Currently, only professional investors can use licensed virtual asset platforms in Hong Kong.
Eligibility thresholds include:
- Individuals: HK$8 million in investment portfolios
- Corporations: HK$8 million in investment assets or HK$40 million in total assets
- Trusts: HK$40 million in total assets
Retail investors are excluded — for now. However, the SFC has indicated that broader access could come in phases as market maturity and risk controls improve.
Frequently Asked Questions (FAQ)
Q: Is a license needed for NFT marketplaces?
A: Only if the NFTs qualify as securities (e.g., represent ownership in a revenue-generating project). Pure digital art or collectibles generally don’t require SFC licensing.
Q: Can foreign companies apply for Hong Kong licenses?
A: Yes, but they must establish a locally incorporated subsidiary that meets all regulatory requirements, including physical office space and senior management presence.
Q: How long does the licensing process take?
A: Typically 6–12 months, depending on application completeness, business model complexity, and responsiveness during review.
Q: Are stablecoins regulated in Hong Kong?
A: If a stablecoin qualifies as a security or is used in a regulated context (e.g., trading on a licensed platform), it falls under SFC oversight. Otherwise, it may be treated as a payment mechanism subject to other regulations.
Q: What happens if a licensee violates rules?
A: The SFC can impose fines, suspend operations, revoke the license, or refer cases to law enforcement for criminal prosecution.
Q: Does holding a license allow global operations?
A: No. A Hong Kong license permits operation within Hong Kong jurisdiction. Operating internationally requires compliance with local laws in each target market.
Final Thoughts: Building the Future of Finance
Hong Kong’s progressive yet cautious approach to virtual asset regulation strikes a balance between innovation and investor protection. By defining clear pathways to licensing, the city is attracting serious players committed to long-term growth.
While entry barriers remain high — particularly around capital requirements and professional investor restrictions — these measures ensure market integrity. As infrastructure matures and public understanding grows, retail access will likely follow.
For entrepreneurs and institutions aiming to operate at the forefront of digital finance, Hong Kong offers one of Asia’s most transparent and forward-looking regulatory environments.
👉 Start your compliant journey into Hong Kong’s virtual asset ecosystem today.