Hong Kong to Implement Mandatory Licensing System for Cryptocurrency Traders and Custodians in 2026
- What's Driving Hong Kong's Crypto Licensing Push?
- How Will the New Licensing System Work?
- Hong Kong's Tech-Finance Integration Strategy
- Tax Changes to Attract Family Offices
- Frequently Asked Questions
Hong Kong is set to introduce a comprehensive licensing framework for cryptocurrency traders and custodians as part of its 2026-2027 budget. The MOVE aims to strengthen investor protection and position the city as a global hub for digital assets. With new regulations covering stablecoins, tax adjustments, and AI integration, Hong Kong is doubling down on its "quality productive forces" strategy.
What's Driving Hong Kong's Crypto Licensing Push?
Financial Secretary Paul Chan unveiled the 2026-2027 budget that places digital assets at the heart of Hong Kong's development strategy. The city is leveraging its unique position as a bridge between mainland China and global markets to attract wealthy individuals and businesses. Unlike previous regulations, the new framework won't exempt banks - any institution handling crypto assets must register with the Securities and Futures Commission (SFC).
How Will the New Licensing System Work?
The upcoming legislation will require licenses for OTC brokers, block traders, and digital asset custodians. This follows consultations conducted in June 2025 by the Financial Services and Treasury Bureau (FSTB) and SFC. The stablecoin ordinance that took effect on August 1, 2025 already mandates 100% reserve backing and restricts retail offerings to approved issuers.
Hong Kong's Tech-Finance Integration Strategy
The government is creating an "AI+" committee to drive efficiency across sectors, supported by the new Sandy Ridge data center hub. Traditional finance is also evolving, with the HKEX moving to T+1 settlement cycles to reduce counterparty risk. A dematerialized securities market launching this year will eliminate paper share certificates.
Tax Changes to Attract Family Offices
New tax rules coming in early 2026 will clarify exemptions for digital assets, precious metals, and commodities held by family offices. The changes aim to lure more ultra-high-net-worth individuals to base their operations in Hong Kong. The scope will expand to include individual investment funds commonly used by single-person households.
Frequently Asked Questions
When will Hong Kong's crypto licensing take effect?
The legislation is expected to be tabled in 2026, with implementation likely following a standard legislative process of 6-12 months.
Do banks need separate licenses for crypto services?
Yes, unlike previous frameworks, banks will need to register with the SFC to offer any digital asset services.
What are the requirements for stablecoin issuers?
Issuers must maintain 100% reserves and obtain approval before offering tokens to retail investors.
