What Licenses Do Virtual Asset Platforms Need to Operate in Hong Kong?

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Hong Kong has officially positioned itself as a global hub for virtual assets, with the Financial Services and Treasury Bureau releasing the Policy Statement on the Development of Virtual Assets in Hong Kong to reinforce market confidence. As the regulatory landscape becomes increasingly clear, businesses seeking to operate legally in this space now have a transparent pathway forward. Unlike unregulated environments where uncertainty prevails, Hong Kong offers a structured, rules-based framework—providing clarity and legitimacy for compliant virtual asset platforms.

This article breaks down the licensing requirements for virtual asset platforms in Hong Kong, clarifying the nature of regulated activities, identifying essential licenses, and explaining how businesses can achieve full compliance under current regulations.

Understanding Virtual Assets Under Hong Kong Law

Before diving into licensing, it’s crucial to understand how Hong Kong defines virtual assets. According to the Securities and Futures Commission (SFC), virtual assets are “value represented in digital form,” including digital tokens such as cryptocurrencies, utility tokens, security-backed tokens, virtual commodities, or any similar digital assets—regardless of whether they qualify as securities or futures contracts under the Securities and Futures Ordinance (SFO).

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This definition is intentionally broad. It encompasses NFTs, blockchain-based tokens, and even data with measurable value. However, not all virtual assets fall under SFC supervision. The key distinction lies in whether the asset constitutes a security or futures contract.

As stated in the SFC’s November 2019 Position Paper on Regulating Virtual Asset Trading Platforms, the commission does not have jurisdiction over platforms that only trade non-security virtual assets. Since these platforms do not engage in regulated activities under the SFO, they are outside the SFC’s licensing regime.

In short:
✅ Platforms offering security-token trading — such as tokenized stocks or asset-backed digital securities — are regulated by the SFC.
❌ Platforms dealing exclusively in non-financial digital assets (e.g., pure NFT art marketplaces) are currently not subject to SFC licensing, though other laws may apply.

Core Regulatory Licenses Issued by the SFC

To operate legally in Hong Kong’s financial ecosystem, firms must obtain specific licenses based on their business activities. The SFC divides regulated activities into 12 categories; however, only 10 are currently active (Categories 11 and 12 remain unimplemented). Each license corresponds to a particular financial service.

Here’s a breakdown of the most relevant licenses for virtual asset platforms:

It’s important to note that some licenses come in “large” and “small” variants:

These nuances matter when structuring your business model and determining which licenses to pursue.

Essential Licenses for Virtual Asset Platforms

According to the SFC’s 2019 Position Paper, any platform operating in Hong Kong that offers trading in at least one security-type virtual asset must be licensed. Specifically, such platforms are expected to hold:

This dual-license requirement ensures that platforms both legally facilitate trades and operate compliant trading infrastructure. For example, OSL Digital Securities Limited—the first fully licensed virtual asset exchange in Hong Kong—holds both Type 1 and Type 7 licenses.

However, this isn’t a one-size-fits-all rule. Additional licenses may be required depending on services offered:

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Thus, while Type 1 and Type 7 are foundational, the full licensing scope depends on your operational model. A platform offering advisory services, portfolio management, and trading will likely need multiple licenses.

Can You Assemble Licenses Through Acquisition?

Some may wonder: Can I simply acquire separate licensed entities and combine them under one group? The answer is no.

The SFC does not allow piecemeal licensing through corporate acquisitions unless you fully integrate an existing licensed platform. You cannot “stitch together” different licenses from unrelated entities to create a compliant virtual asset business.

Instead, the only viable path is to establish a legal entity in Hong Kong and apply directly for licensing. Notably:

This underscores the importance of proper corporate structuring from the outset.

Stable Regulatory Environment: Open-Ended Licensing

A major advantage of Hong Kong’s framework is its open-ended licensing model, confirmed in the 2021 consultation conclusions by the Financial Services and Treasury Bureau.

Once granted, an SFC license remains indefinitely valid, provided the licensee remains compliant and operational. There is no mandatory renewal cycle or automatic expiration—offering long-term stability for investors and operators alike.

This policy acknowledges the significant investment required to build secure, scalable trading platforms. By ensuring regulatory continuity, Hong Kong incentivizes serious players to establish durable businesses rather than short-term ventures.

Who Can Trade? Access Is Currently Limited to Professional Investors

Even licensed platforms face restrictions on user access. Currently, only professional investors can trade on regulated virtual asset platforms in Hong Kong.

Eligibility criteria include:

Retail investors are excluded—for now.

While this limits market size initially, it reflects a cautious approach aimed at protecting less-experienced participants while allowing institutional adoption to mature.

Frequently Asked Questions (FAQ)

Q: Do all virtual asset platforms need an SFC license?
A: No—only those offering trading in security-type tokens require licensing. Platforms dealing solely in non-security digital assets (like most NFTs) are not currently regulated by the SFC.

Q: Is a Type 7 license always required?
A: Yes—if your platform uses automated systems to match trades (i.e., functions as an exchange). Manual or OTC desks may have different requirements.

Q: Can I operate without holding client funds?
A: Yes—but you’ll still need appropriate licensing if you facilitate securities trading. Custody introduces additional obligations but isn’t mandatory for licensing itself.

Q: Are there plans to allow retail investors?
A: While not permitted today, regulators have signaled openness to future inclusion once safeguards are proven effective.

Q: How long does licensing take?
A: Typically 6–12 months, depending on application completeness, business structure, and compliance readiness.

Q: Does Hong Kong recognize foreign licenses?
A: No—each entity must apply locally. Cross-border operations require separate authorization.

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Final Thoughts

Hong Kong’s push to become a global virtual asset hub is backed by a clear, pragmatic regulatory framework. While entry barriers exist—especially around licensing and investor access—the rules are transparent and consistently enforced.

For serious operators, obtaining the correct combination of Type 1, Type 4, Type 7, and potentially Type 9 licenses is not just a legal necessity—it’s a competitive advantage. With open-ended validity and strong institutional support, Hong Kong offers one of Asia’s most promising environments for compliant digital asset innovation.

As regulation matures and retail access expands, the ecosystem will likely evolve rapidly. Those who establish themselves now under full compliance will be best positioned to lead in the next phase of virtual finance.

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