Hong Kong’s Top Finance Pros Demand Crypto Reporting Rule Overhaul—Here’s Why It Matters
Hong Kong's financial elite are pushing back against regulatory red tape—and they're aiming straight at cryptocurrency reporting requirements.
Industry insiders argue current rules stifle innovation while doing little to protect investors. They claim the existing framework treats digital assets like traditional securities—a mismatch that ignores crypto's unique architecture and global nature.
One association representing senior bankers and asset managers recently submitted a formal request to the Securities and Futures Commission. Their proposal? Simplify disclosure mandates for licensed virtual asset service providers, especially around routine transactions that pose minimal risk.
They're not asking for a regulatory holiday—just smarter rules. Think streamlined reporting for pre-approved wallet addresses, reduced frequency for high-volume institutional trades, and clearer guidelines on what constitutes a 'reportable event.' The goal is to reduce administrative drag without compromising oversight.
Behind the scenes, there's a bigger play here. Hong Kong wants to cement its status as Asia's crypto hub, competing with Singapore and Dubai. But heavy-handed reporting could drive firms to friendlier jurisdictions—taking jobs, capital, and innovation with them.
Critics warn that loosening requirements might invite the very speculation and opacity regulators aim to prevent. But proponents counter that current rules are like using a sledgehammer to crack a nut—ineffective and unnecessarily destructive.
Here's the cynical finance jab: Traditional banks get bailouts when they fail, but crypto firms get paperwork mountains when they succeed. The regulatory asymmetry is almost artistic.
Watch this space. If Hong Kong listens to its professionals, we could see a new blueprint for crypto regulation—one that actually understands the technology it's trying to govern.
Association Pushes To Soften CARF Requirements
On Monday, the Hong Kong Securities & Futures Professionals Association (HKSFPA) released a response to the implementation of the OECD’s Crypto Asset Reporting Framework (CARF) and the related amendments made to Hong Kong’s Common Reporting Standard (CRS).
In their official response, the association shared its concerns about certain elements of the CARF and CRS amendments, warning that they could create operational and liability risks for market participants.
Notably, the HKSFPA affirmed that it mostly supports the proposals, but urged regulators to ease the record-keeping requirements for dissolved entities. “We generally agree with the six-year retention period to align with existing inland revenue and CRS standards,” they explained, “but we have concerns regarding the obligations placed on individuals post-dissolution.”
The industry group argued that holding directors or principal officers personally liable for record-keeping after dissolution poses significant practical challenges, noting that former officers of dissolved companies may lack the resources, infrastructure, and legal standing to maintain sensitive personal data of former clients.
As a result, they suggested the government “allow for the appointment of a designated third-party custodian (such as a liquidator or a licensed corporate service provider) to fulfill this obligation, rather than placing indefinite personal liability and logistical burden on former individual officers.”
Moreover, the association also cautioned that the proposed uncapped per-account penalties for minor technical errors. They asserted that this could lead to “disproportionately astronomical fines for systemic software errors affecting thousands of accounts where there was no intent to defraud.”
To solve this, they proposed a “reasonable cap” on total penalties for unintentional administrative errors or first-time offenses to ensure that the per-account calculation “is reserved for cases of willful negligence or intentional evasion.”
Additionally, the group suggested a “lite” registration or a simplified annual declaration process for Reporting Crypto-Asset Service Providers (RCASPs) that anticipate filing Nil Returns, to reduce administrative costs while still satisfying the Inland Revenue Department’s oversight requirements.
Hong Kong’s Crypto Hub Efforts
Notably, Hong Kong is among the 76 markets committed to implementing the upcoming crypto reporting framework, which is the OECD’s new global standard for exchanging tax information on crypto assets.
The CARF is designed to prevent tax evasion by bringing crypto users across borders under global tax transparency rules, similar to the OECD’s existing CRS for traditional finance. Hong Kong will be among the 27 jurisdictions that will begin their first cross-border exchanges of crypto reporting data in 2028.
Over the past few years, Hong Kong financial authorities have been actively working to develop a comprehensive framework that supports the expansion of the digital assets industry, part of its strategy to become a leading crypto hub in the world.
As reported by Bitcoinist, the city is exploring rules to allow insurance companies to invest in cryptocurrencies and the infrastructure sector. The Hong Kong Insurance Authority recently proposed a framework that could channel insurance capital into cryptocurrencies and stablecoins.
Moreover, the Hong Kong Monetary Authority (HKMA) is expected to grant the first batch of stablecoin issuer licenses in the first few months of the year. The HKMA enacted the Stablecoins Ordinance in August, which directs any individual or entity seeking to issue a stablecoin in Hong Kong, or any Hong Kong Dollar-pegged token, to obtain a license from the regulator.
Multiple companies have applied for the license, with over 30 applications filed in 2025, including logistics technology firm Reitar Logtech and the overseas arm of Chinese mainland financial technology giant Ant Group.
