Industry group warns Hong Kong crypto 'hard start' could halt managers

The Hong Kong Securities & Futures Professionals Association (HKSFPA) warned that the city’s proposed rollout of new crypto licensing regimes may unintentionally force compliant crypto managers to cease activities if regulators proceed without transitional arrangements. The group described a potential "hard start" under which existing firms would be required to be fully licensed by the commencement date of the new rules or cease regulated activities while their applications are under review.

Hong Kong’s Securities and Futures Commission and the Financial Services and the Treasury Bureau are consulting on regimes covering virtual asset dealing, advisory and management services, expanding oversight beyond the current framework for crypto trading platforms. In a consultation submission, the HKSFPA urged a deeming or grace period of six to 12 months for existing practitioners who submit license applications ahead of the regulatory commencement date, citing the complexity of applications and the potential for backlogs.

"Legitimate businesses may be forced to suspend operations while awaiting approval," the HKSFPA wrote. The proposed virtual asset regimes are still at the consultation stage and have no fixed commencement date yet.

Key Topics

Crypto, Hksfpa, Hong Kong, Carf, Virtual Asset Regimes, Deeming Period