What the New VA Dealing and Custody Regimes Mean in Late 2025
Hong Kong has moved from vision to implementation in its digital-asset strategy.
Since June 2025, the Government’s Policy Statement 2.0 and the LEAP framework have been followed by concrete consultations on virtual asset (VA) dealing and VA custodian services, and the Stablecoins Ordinance has come into force.
Six months on, the picture is clearer. Regulators are refining the rules. Global banks and crypto firms are positioning themselves. And Hong Kong is signalling that full-scope, on-chain finance will be built on old-school licensing, capital, and AML rules rather than regulatory experimentation.
Publish Date
19 Dec 2025
Reading Time
15 minutes
Category
Legal Guides
Jurisdiction
Hong Kong
From Policy Statement 2.0 to LEAP: Hong Kong’s New Digital Asset Roadmap
On 26 June 2025, the Financial Services and the Treasury Bureau (FSTB) released its second policy statement on digital assets. The statement anchors Hong Kong’s ambition to be a “trusted, innovative” digital-asset hub and introduces the LEAP framework: Legal and regulatory streamlining, Expanding tokenised products, Advancing use cases, and People and partnerships.
LEAP sits on top of an ecosystem already in motion. Hong Kong has:
- a VATP licensing regime for virtual asset trading platforms,
- spot VA ETFs listed since April 2024, and
- a new Stablecoins Ordinance (Cap. 656), which became operative on 1 August 2025.
Policy Statement 2.0 identifies VA dealers and VA custodians as the missing pieces. The consultations launched in late June are designed to complete that picture and close the remaining gaps in Hong Kong’s centralised crypto framework.
The Proposed VA Dealing Regime: Who Needs a Licence and Why
On 27 June 2025, FSTB and the Securities and Futures Commission (SFC) published a consultation on a new licensing regime for VA dealing service providers.
The regime would apply to any person who, by way of business, deals in virtual assets in Hong Kong, outside a licensed VATP and outside pure peer-to-peer or self-custody activity. The SFC would be the primary supervisor, with the Hong Kong Monetary Authority (HKMA) co-supervising banks and stored-value facility (SVF) issuers that act as VA dealers.
This is a decisive shift from the 2024 OTC-only proposal, which had contemplated Customs & Excise supervision and focused mainly on physical crypto shops. The new perimeter is deliberately broader and aligns with the traditional “dealing in securities/futures” concepts under the Securities and Futures Ordinance.
In-scope activities and assets
The consultation paper suggests that the regime would capture:
- Simple dealing services – VA-VA and VA-fiat conversions, including smaller OTC desks.
- Complex and institutional dealing – brokerage and block trades, execution services for asset managers, and dealing via online platforms.
- Dealing via overseas exchanges or liquidity providers, subject to additional safeguards, so Hong Kong firms can tap global liquidity rather than only trade on local VATPs.
For retail clients, the set of eligible tokens is expected to align with VATP rules: highly liquid tokens plus HKMA-licensed stablecoins once stablecoin licences are issued. Professional investors could access a broader universe, subject to enhanced due diligence, KYC, and suitability processes.
Core obligations – and no transitional comfort
The proposed base requirements are familiar to Hong Kong intermediaries:
- Local presence via a Hong Kong company or registered branch.
- Capital requirements, including minimum paid-up share capital (around HKD 5 million) and liquid-capital thresholds calibrated to business models.
- Fit-and-proper tests for controllers, directors, and licensed staff, plus at least two responsible officers.
- AML/CFT controls, risk management, client-asset protection, record-keeping, and regulatory reporting.
Critically, the consultation does not propose a transitional period. Once legislation takes effect, all in-scope VA dealers would need to be licensed or registered – or pause business until approval is granted. For OTC shops, offshore exchanges with Hong Kong desks, and existing SFC intermediaries dabbling in VAs, this is a material business-continuity issue.
A Purpose-Built VA Custody Regime: From TCSP Patchwork to Licensed Custodians
In a parallel consultation, FSTB and SFC propose a separate licensing regime for VA custodian service providers. Historically, VA custodians have relied on trust and company service provider (TCSP) licences as a proxy, and SFC-licensed VATPs were required to use associated entities with TCSP licences to hold client assets.
That workaround was never designed for modern crypto custody. It focuses on trust-law concepts rather than operational security, key management, or on-chain risk. With VATPs, VA funds, and stablecoins scaling up, the Government now wants a purpose-built custody regime.
Scope, in-scope entities, and carve-outs
Under the proposal, any person providing VA custody “by way of business” in Hong Kong must be licensed by the SFC (or by the HKMA for banks and SVFs). The licensable activity covers both:
- safekeeping of client virtual assets, and
- safekeeping of instruments enabling transfer, such as private keys or MPC credentials.
The consultation expects the following to fall in scope:
- Custodians for SFC-licensed VATPs and SFC-authorised VA funds.
- Banks and SVFs offering VA custody, even as part of broader services.
- Type 9 managers that self-custody VA portfolios.
- Custodial wallet providers that hold assets for users.
Carve-outs include backup key storage by security firms or vaults, pure technical service providers that do not hold keys, and HKMA-licensed stablecoin issuers that only custody their own coins.
Capital, MPC, and assurance
The proposed baseline includes:
- Local incorporation or registered branch plus onshore records.
- Minimum paid-up share capital of HKD 10 million or defined liquid-capital levels.
- Fit-and-proper controllers and at least two responsible officers.
- Robust private-key management, cybersecurity and business-continuity planning, broadly aligned with existing VATP custodial standards.
- A mandatory external assurance assessment, with the SFC a direct party to the engagement.
Notably, the consultation explicitly recognises multi-party computation (MPC) and other advanced key-management architectures. This is a step beyond earlier FIPS-centric thinking and signals that Hong Kong wants to support more sophisticated institutional custody models.
As with VA dealing, no transitional period is proposed. In-scope custodians would need licences in place when the regime starts, or they must suspend business.
Stablecoins: Completing the Triangle with Issuers, Dealers and Custodians
On 21 May 2025, the Legislative Council passed the Stablecoins Bill, and the Stablecoins Ordinance took effect on 1 August 2025, introducing a licensing regime for fiat-referenced stablecoin (FRS) issuers.
HKMA expects to issue the first stablecoin licences in early 2026, limiting the initial cohort and insisting on strong reserve, governance and KYC frameworks.
The industry has already reacted:
- A joint venture between Standard Chartered, Animoca Brands and HKT – Anchorpoint Financial – has been set up to apply for a Hong Kong stablecoin licence.
- At the same time, some Chinese tech groups have paused stablecoin plans for political and supervisory reasons, underlining that Hong Kong’s framework is not insulated from mainland policy.
When combined, a stablecoin issuer licence, VA dealing licence, and VA custodian licence create a full regulated stack for primary issuance, secondary trading and institutional-grade safekeeping of tokenised money and assets.
What Has Actually Changed Since LEAP: Six Months of Market Movement
From a policy standpoint, LEAP was a directional statement. Six months later, we can point to several concrete changes and signals:
- Consultation phase completed – FSTB and SFC closed the VA dealing and custody consultations on 29 August 2025; industry groups such as ASIFMA, law firms, exchanges and banks submitted detailed feedback on proportionality, offshore execution, and MPC use.
- Stablecoins regime live, applications starting – HKMA has opened an “early engagement” window and publicly indicated a cautious, small first batch of licences in 2026.
- ASPIRe roadmap and VATP easing – in November 2025, the SFC updated its ASPIRe roadmap and issued circulars allowing licensed VATPs to tap global order books, improving liquidity while maintaining safeguards.
- Tokenisation and ETF expansion – guidance and speeches have continued to promote tokenised bonds and VA ETFs as core use cases rather than experiments.
In short, the last six months have not been about “more consultations” only. They have been about locking in a long-term structure: stablecoins at the money layer, VA dealing at the intermediation layer, and custody at the infrastructure layer.
Practical Implications for Key Market Participants
Broker-dealers, asset managers, banks, and SVF issuers now face a clear trade-off.
If they want to expand into OTC VA dealing, structured VA products, or integrated custody, they will need to map their activities against the proposed VA dealing and custody regimes and plan for additional licences or conditions. The upside is a cleaner regulatory perimeter and a level playing field against pure-crypto entrants.
Global platforms servicing Hong Kong clients will increasingly need:
- a local entity and onshore presence,
- sufficient paid-up capital and liquid resources,
- fit-and-proper local management, and
- a compliant custody solution under the new regime.
The ability to route trades to overseas liquidity venues will help, but only if firms can demonstrate robust counterparty due diligence, AML processes, and proper safekeeping with licensed custodians.
Custodians that today rely on TCSP licences must prepare for a full SFC licence with more demanding technical and governance standards. Non-custodial wallet providers may be able to remain out of scope, but “soft-custody” or delegated models will need careful structuring once final rules are known.
Issuers and tokenisation platforms will need a stacked compliance model:
- Stablecoins Ordinance for the money instrument,
- VA dealing regime for distribution and market-making,
- VA custody regime for safekeeping and institutional onboarding.
The prize is a legally recognised on-chain infrastructure that traditional banks, funds and corporates can actually use.
What Operators Should Do Now – Before the Bill Lands
Based on the consultations and subsequent regulatory messaging, we expect the Government to introduce a bill in 2026to implement the VA dealing and custody regimes.
For operators, the next 6–12 months should be treated as pre-implementation runway:
- Conduct a licence-gap analysis covering dealing, custody, stablecoins, VATP, and fund-management activities.
- Design an appropriate entity structure and booking model for Hong Kong, including whether functions sit in licensed VATPs, dealers, custodians or banks.
- Revisit custody architecture, including decisions on MPC, key-segmentation, and external assurance providers.
- Plan for capital and liquidity requirements, especially for balance-sheet intensive strategies.
- Engage early with SFC and HKMA, particularly if you expect to rely on delegated custody or overseas execution.
- Update client documentation, disclosures and product governance frameworks to reflect the new risk and regulatory environment.
At Legasset, we work with exchanges, banks, funds and infrastructure providers on Hong Kong VA strategy, from policy interpretation and licence planning to documentation and cross-border structuring where Hong Kong, EU and other regimes intersect.
FAQs About Hong Kong VA Dealing and Custody
When will the new VA dealing and custody regimes actually take effect?
The consultation phase closed on 29 August 2025. A bill is expected in 2026, but no commencement date has been confirmed. Firms should prepare on the assumption of limited or no transitional relief.
Which businesses will definitely need a VA dealing licence?
Any person “by way of business” dealing in VAs in Hong Kong outside a licensed VATP or pure P2P context is in scope. That includes OTC desks, brokers, and dealers routing orders to offshore exchanges for Hong Kong clients.
How will VA custodians be regulated compared with today’s TCSP model?
Instead of relying on TCSP registration, VA custodians will require an SFC (or HKMA) licence, with dedicated capital, governance, cybersecurity, and private-key management standards plus external assurance.
How does this interact with the Stablecoins Ordinance?
The Stablecoins Ordinance governs fiat-referenced stablecoin issuers and key activities. The VA dealing regime will sit above it for trading and intermediation. The VA custody regime will govern safekeeping of both stablecoins and other VAs held for clients.
What should existing SFC/HKMA licensees do if they already offer VA services?
They should map each VA activity (trading, custody, advisory, staking, structured products) to the proposed regimes, identify where additional licences or approvals will be required, and engage early with regulators to avoid business disruption once legislation is introduced.
