The Hong Kong Securities and Futures Professionals Association criticises plans to require full virtual asset licenses for even minimal crypto exposure, warning it could hinder sector innovation and market integration.
The Hong Kong Securities and Futures Professionals Association (HKSFPA) has lodged a formal objection to proposed changes that would require traditional asset managers to obtain a full virtual asset management licence even for minimal cryptocurrency exposure, saying the move would impose a disproportionate compliance burden and risk chilling engagement with the sector.
According to the report by Coinspeaker, the association’s submission on Jan. 20 criticised the government’s plan to remove the existing 10% “de minimis” threshold, introduced under the current November 2018 rules, which allows firms holding a Type 9 Asset Management licence to invest up to 10% of a fund’s value in crypto without seeking additional authorisation. Under the proposals, any allocation to crypto, however small, would trigger the requirement for a separate virtual asset licence; the HKSFPA highlighted the anomaly that a portfolio manager with a 1% allocation to Bitcoin would, under the new regime, need to hold the new licence.
The association described the approach as “all or nothing” and warned it would deter traditional managers from experimenting with crypto, undermining the government’s stated objective of integrating Web3 with mainstream finance. The submission also faulted proposed custody rules that would limit custody of fund assets to SFC‑licensed firms, saying those mandates would be impractical for private equity and venture capital funds investing in early‑stage tokens that local custodians do not yet support.
Regulators have argued the tighter regime is necessary. The Securities and Futures Commission (SFC) defended the proposal to abolish the threshold in its December 2025 consultation conclusions, saying the change would prevent firms from structuring investments to avoid oversight and would standardise investor protection. The wider package would reframe the current notification‑based approach into a separate licensing regime under Hong Kong’s Anti‑Money Laundering and Counter‑Terrorist Financing Ordinance; managers who operate without the new licence could face up to seven years’ imprisonment and fines of HK$5 million, according to the consultation materials reported.
The dispute comes as part of a broader push by Hong Kong to position itself as a global digital asset hub. The Secretary for Financial Services and the Treasury, Christopher Hui, has previously said the licensing regimes are a significant step in strengthening the city’s legal framework for digital assets, and authorities notified market participants of 12 initiatives covering custody, staking and related services as the city accelerates its crypto licensing programme following the launch of a trading platform regime in June 2023.
Industry groups have also sounded practical alarms about implementation. Multiple reports note the HKSFPA’s plea for transitional arrangements, urging regulators to reinstate a threshold exemption or, at minimum, introduce a grace or “deeming” period of six to 12 months for existing practitioners who file applications before the new rules commence, so that compliant managers are not forced to suspend crypto activities while their licences are processed. Several commentators described the risk of a “hard start” that could force established crypto managers temporarily to cease operations if no transition is provided.
The consultation on the proposals closes on Jan. 23. Authorities are aiming to introduce a bill to the Legislative Council in 2026. As currently drafted, regulators have proposed no transitional measures; managers would be required to secure the new licence before the regime’s commencement or cease crypto‑related activities until authorised. The HKSFPA is pressing for both the reinstatement of a de minimis threshold and a practical transition timetable to avoid an abrupt disruption to funds and market activity.
Separately, the HKSFPA has urged flexibility on related reporting and record‑keeping proposals. According to industry coverage, while the association supports aligning retention periods with prevailing tax standards, it opposes extending obligations to dissolved entities, a change it says would create operational and legal burdens, reflecting wider market concern that overly rigid compliance rules could stifle innovation in Hong Kong’s emerging digital asset sector.
The debate highlights a central tension in Hong Kong’s policymaking: balancing investor protection and AML/CTF safeguards with measures intended to keep the city attractive to traditional asset managers and crypto entrepreneurs alike. With submissions closed on Jan. 23 and a legislative timetable set for 2026, the final shape of the regime, and whether regulators will soften the transition or the scope of licensing triggers, will determine how smoothly Hong Kong’s strategy to marry Web3 and conventional finance proceeds.
- https://www.coinspeaker.com/hong-kong-securities-group-opposes-stricter-crypto-licensing-rules-for-asset-managers/ – Please view link – unable to able to access data
- https://www.coinspeaker.com/hong-kong-securities-group-opposes-stricter-crypto-licensing-rules-for-asset-managers/ – The Hong Kong Securities and Futures Professionals Association (HKSFPA) has objected to proposed regulatory changes that would require traditional asset managers to obtain full virtual asset licenses for minimal cryptocurrency exposure. The group argues that removing the existing 10% threshold, which allowed firms to invest up to 10% of a fund’s value in crypto without additional licensing, imposes a disproportionate compliance burden. Under the new rules, even a 1% allocation to Bitcoin would necessitate a complete virtual asset management license. The HKSFPA warns that this ‘all or nothing’ approach could deter traditional managers from exploring the asset class, contradicting the government’s goal of integrating Web3 with traditional finance. The consultation period ends on January 23, with authorities targeting a legislative bill for the Legislative Council in 2026. The HKSFPA is urging regulators to reinstate the threshold exemption and implement a transitional grace period for existing practitioners.
- https://www.odaily.news/en/newsflash/465034 – The Hong Kong Securities and Futures Professionals Association (HKSFPA) has submitted feedback opposing proposed tightening measures in Hong Kong’s digital asset management regulatory framework. The HKSFPA primarily opposes the elimination of the current ‘de minimis’ arrangement, which allows institutions holding a Type 9 (asset management) license to allocate up to 10% of a fund’s total assets to crypto assets without needing an additional virtual asset management license. The proposed plan intends to abolish this threshold, meaning that even a 1% allocation to Bitcoin would require obtaining a full virtual asset management license. The HKSFPA points out that this ‘all-or-nothing’ regulatory approach is disproportionate and could impose significant compliance costs even for limited risk exposure, potentially deterring traditional asset managers from exploring the crypto asset space.
- https://www.cointeeth.com/news/hong-kong-s-securities-industry-group-pushes-back-as-regulators-plans – The Hong Kong Securities and Futures Professionals Association (HKSFPA) has raised concerns over proposed regulatory changes that would require traditional asset managers to obtain full virtual asset licenses for minimal cryptocurrency exposure. The group argues that removing the existing 10% threshold, which allowed firms to invest up to 10% of a fund’s value in crypto without additional licensing, imposes a disproportionate compliance burden. Under the new rules, even a 1% allocation to Bitcoin would necessitate a complete virtual asset management license. The HKSFPA warns that this ‘all or nothing’ approach could deter traditional managers from exploring the asset class, contradicting the government’s goal of integrating Web3 with traditional finance. The consultation period ends on January 23, with authorities targeting a legislative bill for the Legislative Council in 2026. The HKSFPA is urging regulators to reinstate the threshold exemption and implement a transitional grace period for existing practitioners.
- https://www.banklesstimes.com/articles/2026/01/20/hong-kong-securities-body-pushes-back-on-tighter-crypto-licensing-rules/ – The Hong Kong Securities and Futures Professionals Association (HKSFPA) has objected to proposed regulatory changes that would require traditional asset managers to obtain full virtual asset licenses for minimal cryptocurrency exposure. The group argues that removing the existing 10% threshold, which allowed firms to invest up to 10% of a fund’s value in crypto without additional licensing, imposes a disproportionate compliance burden. Under the new rules, even a 1% allocation to Bitcoin would necessitate a complete virtual asset management license. The HKSFPA warns that this ‘all or nothing’ approach could deter traditional managers from exploring the asset class, contradicting the government’s goal of integrating Web3 with traditional finance. The consultation period ends on January 23, with authorities targeting a legislative bill for the Legislative Council in 2026. The HKSFPA is urging regulators to reinstate the threshold exemption and implement a transitional grace period for existing practitioners.
- https://www.btcc.com/en-US/square/Global%20Cryptocurrency/1430128 – The Hong Kong Securities and Futures Professionals Association (HKSFPA) has voiced concerns over proposed amendments to the Crypto Asset Reporting Framework (CARF), urging regulators to adopt more flexible record-keeping requirements. While supporting the six-year retention period aligned with existing tax standards, the association opposes extending obligations to dissolved entities, citing operational and legal burdens. The CARF, proposed by the OECD in December 2024, aims to facilitate cross-border tax information sharing for crypto asset holders by 2028. Market participants warn that rigid compliance rules could stifle innovation in Hong Kong’s burgeoning digital asset sector.
- https://cointelegraph.com/news/hong-kong-crypto-licensing-hard-start-industry-warning – The Hong Kong Securities and Futures Professionals Association (HKSFPA) has 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 warning centers on what the group described as 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. The HKSFPA is urging regulators to implement a 6 to 12-month deeming period for existing practitioners who submit their applications prior to the commencement date, to allow operations to continue during processing.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article reports on the Hong Kong Securities and Futures Professionals Association’s (HKSFPA) objection to proposed changes in crypto licensing rules, dated January 20, 2026. Similar reports from other sources, such as Cointelegraph and BanklessTimes, were published around the same time, indicating that the information is current and not recycled. However, the reliance on a single source (Coinspeaker) for the primary information raises concerns about the originality and independence of the content. Further verification from additional independent sources is recommended to confirm the freshness and originality of the narrative.
Quotes check
Score:
6
Notes:
The article includes direct quotes attributed to the HKSFPA’s submission, such as describing the approach as “all or nothing” and warning it would deter traditional managers from exploring crypto. However, these quotes cannot be independently verified through the provided sources. The absence of verifiable quotes raises concerns about the authenticity and accuracy of the attributed statements. Further verification from the original submission or additional independent sources is necessary to confirm the accuracy of these quotes.
Source reliability
Score:
5
Notes:
The primary source of the article is Coinspeaker, a news outlet that has previously published similar content. While Coinspeaker is a known publication, its reputation and editorial standards are not as established as major news organizations like the BBC or Reuters. The reliance on a single source with limited independent verification raises concerns about the reliability and potential biases in the reporting. Cross-referencing with other reputable sources is advisable to ensure the accuracy and objectivity of the information presented.
Plausability check
Score:
7
Notes:
The article discusses proposed changes to Hong Kong’s crypto licensing rules, including the removal of the 10% de minimis threshold and the requirement for a full virtual asset management license for any crypto exposure. These proposed changes align with Hong Kong’s broader regulatory push to tighten oversight of digital assets. However, the article’s reliance on a single source and the inability to independently verify direct quotes raise questions about the completeness and accuracy of the information. Further verification from additional independent sources is recommended to confirm the plausibility of the claims made.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article reports on the HKSFPA’s objection to proposed changes in Hong Kong’s crypto licensing rules. However, the reliance on a single source (Coinspeaker) and the inability to independently verify direct quotes raise concerns about the freshness, originality, and reliability of the information. Further verification from additional independent sources is necessary to confirm the accuracy and objectivity of the reporting. Given these concerns, the content does not meet the standards for publication under our editorial indemnity.