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Hong Kong

Retail_Trading_Status

Allowed-Regulated Unknown
Analysis ID
#579
Version
Latest
Created
2025-06-27 13:07
Workflow Stage
Live

Executive Summary

Hong Kong permits retail cryptocurrency trading under a comprehensive regulatory framework overseen by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA). A mandatory licensing regime for Virtual Asset Service Providers (VASPs) is in place to protect investors and combat financial crime, with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) playing a key role. Hong Kong has also passed a Stablecoins Bill, set to take effect on August 1, 2025, demonstrating a forward-looking approach.

Key Pillars

  • Primary Regulator: The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) oversee the regulatory framework.
  • Core Compliance: Anti-Money Laundering (AML), Know Your Customer (KYC), and Counter-Terrorist Financing (CTF) requirements are mandated through the AMLO.
  • Licensing: A mandatory licensing regime is in place for Virtual Asset Service Providers (VASPs), including cryptocurrency exchanges.

Landmark Laws

  • Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO): Amended to include VASPs, subjecting licensed platforms to stringent KYC, AML, and CTF requirements.
  • New licensing regime for Virtual Asset Trading Platforms (VATPs): Implemented on June 1, 2023, requiring any platform offering cryptocurrency trading services in or to Hong Kong to be licensed and regulated by the SFC.
  • Stablecoins Bill / Stablecoins Ordinance (Cap. 656): Passed on May 21, 2025, with the effective date set for August 1, 2025, establishing a licensing regime for fiat-referenced stablecoin issuers.

Considerations

  • Investor Protection Measures: Licensed exchanges must assess an investor's knowledge and risk tolerance. Limits exist on the types of cryptocurrencies offered to retail investors, generally restricted to high-liquidity, large-market-cap assets like Bitcoin (BTC) and Ethereum (ETH).
  • Stablecoin Regulation: The Stablecoins Bill aims to supervise activities involving stablecoins and introduces a licensing regime for regulated stablecoin activities.

Notes

  • The SFC has granted licenses to 11 VATPs as of June 2025.
  • Hong Kong has approved the listing of spot Bitcoin and Ether Exchange-Traded Funds (ETFs) to provide retail investors with regulated avenues to gain exposure to cryptocurrencies.
  • The SFC has outlined a roadmap for the future, signaling its intention to potentially expand the scope of permitted activities for licensed entities, including services like staking and lending for professional investors.

Detailed Explanation

Hong Kong permits retail cryptocurrency trading under a comprehensive and evolving regulatory framework overseen by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA). This regulatory environment includes a mandatory licensing regime for Virtual Asset Service Providers (VASPs), including cryptocurrency exchanges. The SFC finalized rules to allow retail trading of cryptocurrencies from June 1, as stated by the regulator. This initiative aims to transform Hong Kong into a virtual assets hub. From this date forward, all centralized crypto trading platforms operating in Hong Kong or selling crypto to Hong Kong investors must obtain a license from the SFC. As of June 2025, the SFC has granted licenses to 11 VATPs. The regulatory framework is supported by the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), which regulates customer due diligence and record-keeping. Although the AMLO does not specifically provide regulations in respect of crypto assets, the SFC has published licensing conditions with regard to virtual assets trading platforms (“VATP”) which cover AML/CTF guidance and requirements.

The SFC has also implemented specific protective measures for retail investors. These measures require companies to set an exposure limit for retail investors and allow trading only in highly liquid tokens issued for at least one year. To further integrate digital assets into the regulated financial system, Hong Kong has approved the listing of spot Bitcoin and Ether Exchange-Traded Funds (ETFs), providing retail investors with a regulated means to gain exposure to cryptocurrencies.

Regarding stablecoins, the government of Hong Kong published a notice in the Gazette on June 6, 2025, appointing August 1, 2025, as the effective date for the Stablecoins Ordinance (Cap. 656), following the passage of the Stablecoins Bill on May 21, 2025. The Ordinance primarily aims to supervise activities involving stablecoins, initially focusing on fiat-referenced stablecoins (FRS), and introduces a licensing regime for regulated stablecoin activities in Hong Kong.

The SFC has outlined a roadmap indicating potential expansion of permitted activities for licensed entities, including services like staking and lending for professional investors.

Summary Points

Hong Kong: Retail Cryptocurrency Trading Status (June 2025)

1. Overall Regulatory Status:

  • Allowed-Regulated: Retail cryptocurrency trading is permitted in Hong Kong under a comprehensive and evolving regulatory framework.

2. Key Regulatory Bodies & Roles:

  • Securities and Futures Commission (SFC):
    • Primary regulator for Virtual Asset Service Providers (VASPs), including cryptocurrency exchanges.
    • Responsible for licensing and supervising VATPs.
    • Sets investor protection measures.
    • Issues guidance on virtual asset marketing.
  • Hong Kong Monetary Authority (HKMA):
    • Works in conjunction with the SFC on virtual asset regulation.
    • Focuses on stablecoin regulation.

3. Important Legislation & Regulations:

  • Virtual Asset Trading Platform (VATP) Licensing Regime (Effective June 1, 2023):
    • Mandatory licensing for platforms offering cryptocurrency trading services in or to Hong Kong.
    • Requires platforms to be licensed and regulated by the SFC.
  • Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO):
    • Amended to include VASPs under its purview.
    • Subjects licensed platforms to stringent KYC, AML, and CTF requirements.
  • Stablecoins Ordinance (Effective August 1, 2025):
    • Establishes a licensing regime for fiat-referenced stablecoin issuers.
    • Supervises activities involving stablecoins.

4. Requirements for Compliance:

  • Licensing: VATPs operating in or selling to Hong Kong investors must obtain a license from the SFC.
  • KYC/AML/CTF: Licensed platforms must implement robust customer due diligence, transaction monitoring, and reporting of suspicious activities.
  • Investor Protection:
    • Exchanges must assess investor knowledge and risk tolerance.
    • Limits on the types of cryptocurrencies offered to retail investors (typically high liquidity, large market capitalization assets like BTC and ETH).
    • Restrictions on marketing to prevent misleading or fraudulent promotions.

5. Notable Restrictions & Limitations:

  • Limited Cryptocurrency Offerings: Retail investors are generally restricted to trading cryptocurrencies with high liquidity and large market capitalization.
  • Exposure Limits: Companies are required to set exposure limits for retail investors.
  • Licensing Requirement: Only licensed VATPs can legally offer cryptocurrency trading services to Hong Kong residents.

6. Recent Developments & Changes:

  • VATP Licensing: The SFC has licensed a number of virtual asset trading platforms to serve retail customers (11 VATPs as of June 2025).
  • Spot Bitcoin and Ether ETFs: Hong Kong has approved the listing of spot Bitcoin and Ether ETFs, providing retail investors with regulated exposure to cryptocurrencies.
  • Stablecoin Regulation: The Stablecoins Ordinance is set to take effect on August 1, 2025, establishing a licensing regime for fiat-referenced stablecoin issuers.
  • Future Roadmap: The SFC has signaled its intention to potentially expand the scope of permitted activities for licensed entities, including services like staking and lending for professional investors.

Full Analysis Report

Report on the Current Status of Retail Cryptocurrency Trading in Hong Kong

Date: 2025-06-27

Topic: Retail_Trading_Status

1. Most Accurate Current Status

Allowed-Regulated

2. Detailed Narrative Explanation

Hong Kong permits individual citizens and residents to legally buy, sell, and hold cryptocurrencies, operating under a comprehensive and evolving regulatory framework. This environment is primarily overseen by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), which have established a mandatory licensing regime for Virtual Asset Service Providers (VASPs), including cryptocurrency exchanges, to ensure investor protection and combat financial crime.

Historically, Hong Kong's approach to cryptocurrency was more cautious, with retail participation being restricted. However, recognizing the growing importance of virtual assets, the government has pivoted towards creating a regulated ecosystem to foster innovation while managing risks. A significant milestone in this shift was the implementation of a new licensing regime for Virtual Asset Trading Platforms (VATPs) on June 1, 2023. This regime requires any platform offering cryptocurrency trading services in or to Hong Kong to be licensed and regulated by the SFC.

The regulatory framework is underpinned by the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), which was amended to bring VASPs under its purview. This subjects licensed platforms to stringent Know Your Customer (KYC), Anti-Money Laundering (AML), and Counter-Terrorist Financing (CTF) requirements. These measures include robust customer due diligence, transaction monitoring, and reporting of suspicious activities, aligning Hong Kong with international standards set by the Financial Action Task Force (FATF).

For retail investors, the SFC has put in place specific protective measures. Licensed exchanges are required to assess an investor's knowledge of virtual assets and their risk tolerance before allowing them to trade. There are also limits on the types of cryptocurrencies that can be offered to retail investors, generally restricted to those with high liquidity and large market capitalization, such as Bitcoin (BTC) and Ethereum (ETH). Furthermore, the SFC has issued guidance on the marketing of virtual assets to prevent misleading or fraudulent promotions.

In a move to further integrate digital assets into its regulated financial system, Hong Kong has also approved the listing of spot Bitcoin and Ether Exchange-Traded Funds (ETFs), providing retail investors with another regulated avenue to gain exposure to cryptocurrencies.

The regulatory landscape continues to evolve. The Hong Kong government has recently passed a Stablecoins Bill, which will establish a licensing regime for fiat-referenced stablecoin issuers, set to take effect on August 1, 2025. This demonstrates a forward-looking approach to regulating different facets of the virtual asset ecosystem. The SFC has also outlined a roadmap for the future, signaling its intention to potentially expand the scope of permitted activities for licensed entities, including services like staking and lending for professional investors.

As of June 2025, a number of virtual asset trading platforms have been licensed by the SFC to serve retail customers, indicating the operational reality of this regulated environment.

3. Specific, Relevant Text Excerpts

  • SFC on Retail Trading: "Hong Kong's Securities and Futures Commission (SFC) has finalised rules to allow retail trading of cryptocurrencies from June 1, the regulator announced on Tuesday, paving the way for a highly anticipated move in the city's drive to become a virtual-assets hub."

  • Licensing of Exchanges: "From now on, all centralized crypto trading platforms that operate in Hong Kong or sell crypto to Hong Kong investors will have to get a license from the Securities and Futures Commission (SFC)." As of June 2025, the SFC has granted licenses to 11 VATPs.

  • AML/CTF Regulations: "The Anti-Money Laundering and Counter Terrorist Financing Ordinance (Cap. 615) (“AMLO”) is the primary legislation which regulates customer due diligence and record keeping requirements. Although the AMLO does not specifically provide regulations in respect of crypto assets, the SFC has published licensing conditions with regard to virtual assets trading platforms (“VATP”) which cover AML/CTF guidance and requirements."

  • Investor Protection Measures: "The SFC has concluded a February consultation on digital asset trading, which proposes various investor protection measures. A total of 152 submissions were received. Measures include requiring companies to set an exposure limit for retail investors as well as allowing retail trading only in highly liquid tokens that have been issued for at least one year."

  • Stablecoin Regulation: "On June 6, 2025, the government of Hong Kong published in the Gazette a notice to appoint August 1, 2025 as the effective date for the Stablecoins Ordinance (Cap. 656) following passage of the Stablecoins Bill on May 21, 2025. The Ordinance's main purpose is to supervise activities involving stablecoins, initially supervise fiat-referenced stablecoins (FRS), and introduce a licensing regime for regulated stablecoin activities in Hong Kong."

4. Direct URL Links to Sources

  1. GPS Legal LLP - Cryptocurrency Regulation in Hong Kong: https://www.gpslegal.asia/post/cryptocurrency-regulation-in-hong-kong
  2. Global Regulation Tomorrow - Hong Kong's Stablecoins Sprint: https://www.globalregulationtomorrow.com/hong-kongs-stablecoins-sprint-historic-bill-passes-draft-licensee-guidelines-released-and-aml-cft-consultation-begins/
  3. South China Morning Post - Hong Kong retail investors to start trading major cryptocurrency tokens: https://www.scmp.com/tech/tech-trends/article/3221544/hong-kong-retail-investors-start-trading-major-cryptocurrency-tokens-june-1-new-virtual-assets
  4. The Straits Times - Hong Kong regulator to issue crypto trading licences with retail investor guard rails: https://www.straitstimes.com/business/hong-kong-regulator-to-issue-crypto-trading-licences-with-retail-investor-guard-rails
  5. CoinDesk - Hong Kong Officially Opens Crypto Trading to Retail Investors: https://www.coindesk.com/policy/2023/08/03/hong-kong-officially-opens-crypto-trading-to-retail-investors-grants-first-licenses-to-hashkey-osl/
  6. CMS Law - Expert Guide to Crypto Regulation in Hong Kong: https://cms.law/en/int/expert-guides/cms-expert-guide-to-crypto-regulation/hong-kong
  7. Solidus Labs - HKMA finalizes stablecoin regulatory framework: https://www.soliduslabs.com/blog/hkma-finalizes-stablecoin-regulatory-framework-what-financial-institutions-need-to-know
  8. Cointelegraph - Hong Kong makes HKVAX third licensed retail crypto exchange: https://cointelegraph.com/news/hong-kong-makes-hkvax-third-licensed-retail-crypto-exchange
  9. Accretive - 2025 Beginner's Guide to Investing in Cryptocurrency in Hong Kong: https://www.accretive.io/learn/beginners-guide-to-investing-in-cryptocurrency-in-hong-kong
  10. OFR - Bridging TradFi and Digital Assets: Hong Kong's Roadmap to a Tokenised Economy: https://www.ofr.org/bridging-tradfi-and-digital-assets-hong-kongs-roadmap-to-a-tokenised-economy/
  11. Charltons - Hong Kong Crypto Regulation 2021: https://www.charltonslaw.com/hong-kong-law/hong-kong-crypto-regulation-2021/
  12. BDC Consulting - Hong Kong Crypto Regulation: What's New in 2023: https://bdc.consulting/insights/hong-kong-crypto-regulation-whats-new-in-2023/
  13. Hogan Lovells - Hong Kong's New Stablecoins Bill: https://www.hoganlovells.com/en/publications/hong-kongs-new-stablecoins-bill
  14. Ledger Insights - Hong Kong updates crypto rules for retail investors: https://www.ledgerinsights.com/hong-kong-updates-crypto-rules-for-retail-investors-blocking-foreign-spot-etfs/
  15. Law.asia - Legal trends in the regulation of crypto currency: https://law.asia/legal-trends-regulation-crypto-currency/
  16. Digital Watch Observatory - Hong Kong’s ZA Bank launches Bitcoin and Ethereum trading: https://dig.watch/updates/hong-kongs-za-bank-launches-bitcoin-and-ethereum-trading
  17. Accretive - How to Buy Cryptocurrency in Hong Kong (2025): https://www.accretive.io/learn/how-to-buy-cryptocurrency-in-hong-kong
  18. Norton Rose Fulbright - Crypto asset regulation in Hong Kong: https://www.nortonrosefulbright.com/en/knowledge/publications/a933d789/crypto-asset-regulation-in-hong-kong
  19. Finance Magnates - Hong Kong's SFC Consults on Allowing Retail Traders to Trade Crypto: https://www.financemagnates.com/cryptocurrency/regulation/hong-kongs-sfc-consults-on-allowing-retail-traders-to-trade-crypto/
  20. Hedgeweek - The Full List of Licensed Crypto Exchanges in Hong Kong (2025): https://www.hedgeweek.com/2025/02/06/349881/full-list-licensed-crypto-exchanges-hong-kong-2025
  21. Fireblocks - Understanding Hong Kong's Virtual Asset Trading Platform Licensing: https://www.fireblocks.com/blog/understanding-hong-kongs-virtual-asset-trading-platform-licensing-a-strategic-overview/
  22. Notabene - Travel Rule Crypto in Hong Kong by the HKMA: https://notabene.id/crypto-travel-rule-hong-kong
  23. White & Case - Hong Kong amends anti-money laundering law to cover virtual asset service providers: https://www.whitecase.com/insight-our-thinking/hong-kong-amends-anti-money-laundering-law-cover-virtual-asset-service
  24. Blockchain Arbitration & Commerce Society - New licences regulation for exchanges in Hong Kong: https://bacsociety.org/new-licences-regulation-for-exchanges-in-hong-kong/
  25. PwC - SFC regulatory framework for virtual asset services providers in Hong Kong: https://www.pwchk.com/en/financial-services/sfc-regulatory-framework-for-vasp-june2023.pdf
  26. Global Regulation Tomorrow - SFC unveils new roadmap for further development of Hong Kong's virtual assets regulatory framework: https://www.globalregulationtomorrow.com/sfc-unveils-new-roadmap-for-further-development-of-hong-kongs-virtual-assets-regulatory-framework/
  27. Cryptopolitan - Amid Circle’s IPO Success in the US, Hong Kong Gears Up with Stablecoin Regulation: https://www.cryptopolitan.com/amid-circles-ipo-success-in-the-us-hong-kong-gears-up-with-stablecoin-regulation/
  28. Morgan Lewis - Hong Kong Stablecoin Ordinance Takes Effect August 2025: https://www.morganlewis.com/pubs/2025/06/hong-kongs-stablecoins-ordinance-to-take-effect-august-1-an-overview-of-the-regulatory-framework

Web Sources (17)

Sources discovered via web search grounding

Search queries used (6)
  • Hong Kong retail cryptocurrency trading regulations 2025
  • SFC Hong Kong crypto retail trading rules
  • Hong Kong Monetary Authority cryptocurrency retail investors
  • Hong Kong crypto exchange licensing regime for retail users
  • Hong Kong Anti-Money Laundering and Counter-Terrorist Financing Ordinance crypto
  • Hong Kong retail crypto trading effective date
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