Hong Kong to Enhance Digital Asset Regulation Framework by Year-End

Hong Kong is set to advance its regulatory framework for digital assets, aiming to submit a revised ordinance bill to the Legislative Council by the end of the year. According to Foresight News, the Acting Secretary for Financial Services and the Treasury, Chan Ho-lin, stated that the new framework will incorporate virtual asset advisory and management services into a mandatory licensing system, alongside trading and custody services. This initiative follows the principles outlined in the "Hong Kong Digital Asset Development Policy Declaration 2.0" released in June last year. The new system will adhere to the principle of "same business, same risk, same rules," aligning with regulated activities under the Securities and Futures Ordinance. Chan emphasized that there will be no transitional arrangements for existing service providers to be deemed licensed or registered. Meanwhile, the Executive Director of the Intermediaries Division at the Hong Kong Securities and Futures Commission, Yip Chi-hang, revealed that virtual asset-related trading volume increased by approximately 75% year-on-year last year, and tripled in the first quarter of this year. As of the end of May, over 200 licenses have been issued through the current mechanism, covering trading (84 licenses), advisory (74 licenses), and management (63 licenses) services. Yip stressed that the approval of licenses should not be based on quantity alone, but must balance market capacity and quality.