{"id":151320,"date":"2026-10-30T10:02:51","date_gmt":"2026-10-30T10:02:51","guid":{"rendered":"https:\/\/www.legal500.com\/guides\/?post_type=comparative_guide&#038;p=151320"},"modified":"2026-10-30T11:03:44","modified_gmt":"2026-10-30T11:03:44","slug":"hong-kong-blockchain-crypto-assets","status":"publish","type":"comparative_guide","link":"https:\/\/www.legal500.com\/guides\/chapter\/hong-kong-blockchain-crypto-assets\/","title":{"rendered":"Hong Kong: Blockchain &amp; Crypto Assets"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-151320","comparative_guide","type-comparative_guide","status-publish","hentry","guides-blockchain-crypto-assets","jurisdictions-hong-kong"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Slaughter and May<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2024\/10\/SandM-logo-2019-200x200-1.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Slaughter and May<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2024\/10\/SandM-logo-2019-200x200-1.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Blockchain &amp; Crypto Assets laws and regulations applicable in Hong Kong<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide a high-level overview of the blockchain market in your jurisdiction. In what business or public sectors are you seeing blockchain or other distributed ledger technologies being adopted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Hong Kong has embraced blockchain and distributed ledger technology (\u201cDLT\u201d), being listed by the Worldwide Crypto Readiness Report as the most \u201ccrypto-ready\u201d jurisdiction in the world in 2026, ranking in the top three in terms of the number of cryptocurrency ATMs proportional to geographical size.<\/p>\n<p>In October 2022, the Financial Services and the Treasury Bureau of the Hong Kong Government (\u201cFSTB\u201d) published a policy statement (\u201c2022 FSTB Policy Statement\u201d) explaining its approach to and vision for the development of a vibrant ecosystem for virtual assets (\u201cVAs\u201d) in Hong Kong, illustrating the Hong Kong Government\u2019s proactive approach to embracing future opportunities in the sector. Following the publication of the 2022 FSTB Policy Statement, as of February 2023, over 80 VA-related companies have expressed interest in establishing a presence in Hong Kong. As of 12 September 2026, there are 6 pending virtual asset trading platform applications and 13 operators of virtual asset trading platforms that have been formally licenced by the Securities and Future Commission (\u201cSFC\u201d). On 26 June 2025, the FSTB issued its Policy Statement 2.0 on the Development of Digital Assets in Hong Kong, building upon the measures outlined in the 2022 FSTB Policy Statement and reinforcing its commitment to establishing Hong Kong as a global hub for innovation in the digital asset field. This Policy Statement 2.0 introduces the &#8220;LEAP&#8221; framework for structuring strategic policy directions and implementing corresponding initiatives. The &#8220;LEAP&#8221; framework focuses on: Legal and regulatory streamlining, Expanding the suite of tokenised products, Advancing use cases and cross-sectoral collaboration, and People and partnership development.<\/p>\n<p>Several major blockchain-focused conferences have taken place in Hong Kong in recent years. The annual Hong Kong Web3 Festival 2025, one of the largest VA- focused conferences in Hong Kong\u2019s history, featured more than 400 industry leaders, project founders, investors, regulatory agency representatives and experts, coming together to discuss key market dynamics and trends relating to Web3 technologies. The annual Hong Kong FinTech Week, organised by the FSTB and Invest HK (the Hong Kong Government department responsible for foreign direct investment) and co- organised by the Hong Kong Monetary Authority (\u201cHKMA\u201d), the SFC and the Insurance Authority (\u201cIA\u201d), will celebrate its 11th anniversary in November 2026 and will cover AI-driven finance, blockchain, green innovation and health tech. The event will host over 1,000 speakers and 800 exhibitors. In February 2026, Hong Kong also hosted one of the largest cryptocurrency events in the world, Consensus, bringing together the cryptocurrency, blockchain and Web3 community.<\/p>\n<p>According to a June 2020 report by the FSTB, in 2019 blockchain firms accounted for 39% of the new fintech<\/p>\n<p>firms brought into Hong Kong by Invest HK. Of these new blockchain firms: 45% were enterprise solutions using blockchain technologies; 27% were trading platforms for digital assets; 14% were involved in custody of digital assets; 9% in trade finance settlement; and 5% in security tokens. Recent statistics from Invest HK show that Hong Kong is now home to over 1100 fintech companies as of July 2024, which represents a significant increase from 230 in 2017, 600 in 2019 and 800 in \u00a02023. Of these, 175 companies are engaged in activities related to blockchain applications and software.<\/p>\n<p>Fintech and digital assets continue to be areas of particular focus for the Hong Kong Government and the city\u2019s key financial regulators, the HKMA, the SFC and the IA. In August 2024, the SFC launched Project Ensemble Sandbox, which aims to improve the interoperability between the traditional financial ecosystem, the new financial ecosystem built on blockchain and among financial institutions. Its goal is to formulate a common standard for the settlement of tokenised assets in Hong Kong and globally. See question 4 for further details.<\/p>\n<p>The Hong Kong Stablecoins Ordinance came into effect on 1 August 2025 and the HKMA granted the first batch of stablecoin issuer licenses on 10 April 2026. See question 2 for further details.<\/p>\n<p>Outside of the finance industry, blockchain has been implemented in various other contexts in Hong Kong, ranging from non-fungible tokens (\u201cNFTs\u201d) tokenising artifacts from museum collections to DLT-based auditing and data management for aviation assets.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please outline the principal legislation and the regulators most relevant to the use of blockchain technologies in your jurisdiction. In particular, is there any blockchain-specific legislation or are there any blockchain-specific regulatory frameworks in your jurisdiction, either now or envisaged in the short or mid-term?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While Hong Kong currently does not have a blockchain-specific legislation or regulatory framework, there are laws and regulation on blockchain-related activities, especially VAs.<\/p>\n<p>The SFC and the HKMA have indicated they will follow a \u201csame activity, same risk, same regulation\u201d approach in regulating VAs.<\/p>\n<p><strong>Regulation of virtual asset trading platforms<\/strong><\/p>\n<p>There are now two licensing regimes in Hong Kong applicable to virtual asset trading platforms (\u201cVATPs\u201d), which operate side-by-side. For \u201csecurity\u201d tokens, the SFC\u2019s licensing regime applies to VATP operators offering trading services in at least one \u201csecurity\u201d as defined under the Securities and Futures Ordinance (Cap. 571) (\u201cSFO\u201d), and permits them to grant access to retail investors subject to additional safeguards (such as requiring tradeable VAs to be \u201clarge-cap\u201d and pre- approved by the SFC and ensuring that retail investors have the requisite knowledge of VAs and their associated risks). For non-security tokens, the AMLO regime mandates licensing for VATP operators offering trading services in such tokens (including, e.g., Bitcoin and Ether). A VATP operator will typically be required to be dually licensed under both the SFO and AMLO as some of the tokens traded on the platform are likely to be securities. It is a criminal offence to carry out a licensed activity in Hong Kong (or actively market to Hong Kong investors) without the requisite licence under the AMLO and\/or the SFO.<\/p>\n<p>As of 31 August 2026, there are 13 formally licensed VATPs in Hong Kong.<\/p>\n<p>Following the publication of the JPEX Statements (see question 9 for more detail) and as part of SFC\u2019s efforts to disseminate information on VATPs in a clear, transparent and timely manner, the SFC maintains several lists of VATPs on its website, including: (i) licensed VATP operators, (ii) VATP applicants (including pre-existing VATPs which are deemed licensed under the transitional arrangements), (iii) applicants whose licence applications have been returned, refused or withdrawn, (iv) closing-down VATPs, and (v) suspicious VATPs.<\/p>\n<p>Licensed firms (whether trading security or non-security tokens) must comply with the new VATP Guidelines which set out requirements relating to, among other things, token due diligence (including the creation of a token admission and review committee), retail investor protection measures (such as measures to compensate clients for potential loss of VAs from storage), client asset custody (such as use of \u201dcold storage\u201d i.e. offline facilities for client VAs), fitness and properness, financial soundness, supervision and internal controls.<\/p>\n<p>In addition, licensees must comply with statutory anti- money laundering (\u201cAML\u201d) and counter-terrorist financing (\u201cCTF\u201d) obligations, such as requirements in relation to customer due diligence and record-keeping, as described in Chapter 12 of the SFC\u2019s Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations and SFC-licensed Virtual Asset Service Providers) dated June 2023 (see also question 6). VATPs must also comply with the \u201cTravel Rule\u201d, which requires VATPs to gather, and make available, certain key information for sanctions screening and transaction monitoring.<\/p>\n<p><strong>Regulation of virtual assets dealing, advisory, management and custodian services<\/strong><\/p>\n<p>The FSTB and SFC have completed public consultations on legislative proposals to regulate VA dealing, advisory, management and custodian service providers. Based on the consultation conclusions, the FSTB and SFC will finalise the legislative proposals, with a view to introducing a bill into the Legislative Council in 2026.<\/p>\n<p>At present, licensed intermediaries engaging in VA dealing, advisory or management activities are required to comply with the requirements set out in the joint circular issued by the SFC and the HKMA in December 2023 (the \u201cSFC-HKMA 2023 Circular\u201d).<\/p>\n<p>Under the legislative proposals, in alignment with \u201cdealing in securities\u201d under the SFO, VA dealing will cover any person, by way of business, making or offering to make an agreement with another person, or inducing or attempting to induce another person to enter into or offer to enter into an agreement, with a view to acquiring, disposing of, subscribing for or underwriting VAs.<\/p>\n<p>VA advisory will cover any person who carries on a business in Hong Kong in: (a) giving advice on whether; which; the time at which; or the terms or conditions on which, VAs should be acquired or disposed of; or<br \/>\n(b) issuing analyses or reports, for the purposes of facilitating the recipients of the analyses or reports to make decisions on whether; which; the time at which; or the terms or conditions on which, VAs are to be acquired or disposed of.<\/p>\n<p>VA management services will cover any person who carries on a business in Hong Kong in providing a service of managing a portfolio of VAs for another person. Deviating from the position under the SFC-HKMA 2023 Circular (which provides for a 10% \u2018de minimis\u2019 threshold), there will be no \u2018de minimis\u2019 threshold under the proposed VA management regime.<\/p>\n<p>The VA custodian regime will cover custodians which safekeep any instrument enabling the transfer of VAs for any person.<\/p>\n<p><strong>Regulation of stablecoin issuers<\/strong><\/p>\n<p>On 17 July 2024, the FSTB and HKMA jointly released the consultation conclusions for the legislative proposal to implement a regulatory regime for stablecoin issuers. Subsequently, on 6 December 2024, the Hong Kong Government gazetted the Stablecoins Bill, which aims to establish a licensing and regulatory regime for issuers of fiat-referenced stablecoins in Hong Kong. The Stablecoins Bill passed the Legislative Council on 21 May 2025 and came into force on 1 August 2025.<\/p>\n<p>The Stablecoins Ordinance: (1) regulates any entity which \u201ccarries on\u201d the issuance of any fiat referenced stablecoin (\u201cFRS\u201d) in Hong Kong, or the issuance of any HK$-denominated stablecoin anywhere in the world; (2) regulates any entity that \u201cactively markets to the HK public\u201d the issuance of any FRS anywhere in the world; and (3) restricts the offering of FRS to those who are licensed permitted offerors, while also granting the HKMA the power to exempt a person, or a class of persons, from any issuance\/offering restrictions. In particular, the offering of FRS will be limited to a specified group of regulated entities (including authorized institutions, licensed corporations and licensed VATPs).<\/p>\n<p>Key licensing criteria under the new Stablecoins Ordinance include: (i) the full backing of issued FRS by reserve assets; (ii) having a minimum paid-up share capital of at least HK$25 million (or an equivalent amount in another currency that is freely convertible into Hong Kong dollars); (iii) certain localisation requirements; (iv) systems of control for recovery planning and orderly wind down in the case of significant operational disruption; and (v) redemption rights (with specific obligations to provide holders with a right to dispose of the reserve assets or claim against the licensee in an event of licensee insolvency).<\/p>\n<p>Upon the effective date of the Stablecoins Ordinance, pre-existing FRS issuers that are conducting FRS issuance activities with a substantial and meaningful presence in Hong Kong may continue to operate for 6 months, on condition they have submitted a licence application to the HKMA within the first three months of the commencement of the new regime. Pre-existing FRS issuers that do not submit a licence application within this timeframe must close down its business in an orderly manner by the end of the 4th month of the commencement of the regime.<\/p>\n<p>On 29 July 2025, the HKMA published further materials to support the implementation of the Stablecoins Ordinance, including explanatory notes on the licensing regime and on transitional provisions for pre-existing issuers, together with its consultation conclusions and finalised guidelines on the supervision of licensed stablecoin issuers and on anti-money laundering and counter-terrorist financing requirements. These materials provide greater clarity on the HKMA\u2019s expectations in relation to ongoing licensing conditions: for example, the HKMA confirmed that reserve assets may, in certain circumstances, be located or managed offshore, that tokenised representations of eligible reserve assets may be accepted, that redemption rights are only triggered once a holder has been successfully onboarded, and that outsourcing arrangements \u2013 such as for private key management or distribution \u2013 are not prohibited, provided appropriate safeguards are in place. The HKMA also indicated that it remains open to exploring mutual recognition arrangements with comparable regimes overseas.<\/p>\n<p>The explanatory notes set out detailed application procedures, including a requirement for applicants to demonstrate concrete use cases, viable business plans and appropriate technical and risk management expertise. Institutions intending to apply were invited to engage with the HKMA by 31 August 2025 for preliminary discussions, with full applications encouraged by 30 September 2025. In line with previous announcements, issuers are required to submit their licence applications by 31 October 2025; where an application is accepted, the HKMA may grant a provisional licence by 1 February 2026, with the grant of a full licence thereafter. Any pre-existing issuer that fails to apply within the specified timeframe, or whose application is rejected, must commence an orderly wind-down on 1 November 2025 and cease all stablecoin issuance activities within one month unless granted an extension by the HKMA.<\/p>\n<p>As of 31 August 2025, the HKMA has received 77 expressions of interest for stablecoin licenses coming from a range of institutions including banks, technology firms, securities and asset managers, and e-commerce and payment companies. However, Mr Eddie Yue, Chief Executive of the HKMA, has commented that balanced against the novelty and potential risks of stablecoins, the need for user protection, market capacity and long-term development, the HKMA is expected to set a high bar for licensing and it is envisaged that only a handful of licences will be granted initially.<\/p>\n<p>By the formal application deadline of 30 September 2025, the HKMA had received 36 licence applications from a range of entities including banks, technology firms and digital asset companies.<\/p>\n<p>On 10 April 2026 the HKMA announced that it had granted two stablecoin issuer licences, to Anchorpoint Financial Limited (a joint venture established by Standard Chartered Bank (Hong Kong) Limited, HKT and Animoca Brands) and the Hongkong and Shanghai Banking Corporation Limited. As of August 2026 these are the only licences to have been granted.<\/p>\n<p>On 12 August 2026, Anchorpoint began the first phase of the rollout of its Hong Kong dollar-backed stablecoin, called HKD At Par (HKDAP) where authorized distributors will offer conversion between HKDAP and fiat currency for institutions, corporate users, and professional investors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current attitude of the government and of regulators to the use of blockchain technology in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Hong Kong Government and key Hong Kong regulators have each launched various initiatives aimed at promoting the use of blockchain and DLT, while also expressing caution as to the risks involved. The 2022 FSTB Policy Statement states that \u201c[a]s an international financial centre, Hong Kong is open and inclusive towards the global community of innovators engaging in VA businesses\u201d and notes that the Hong Kong Government would \u201cput in place timely and necessary guardrails, so that VA innovations can thrive in Hong Kong in a sustainable manner\u201d.<\/p>\n<p>The Hong Kong Government and key regulators have themselves also been active in developing and piloting blockchain technologies.<\/p>\n<p>For example, in the green finance sector, the HKMA and the Bank for International Settlements (\u201cBIS\u201d) Innovation Hub Hong Kong Centre (\u201cBIS Hub\u201d) have in August 2021, announced the launch of Project Genesis 1.0, which explored the tokenisation of green bonds to enable investment in small denominations, combined with real- time tracking of environmental outputs. The project developed two prototype digital platforms to streamline the bond issuance process and improve transparency of the use of proceeds. The platforms combined smart contracts, blockchain, Internet of Things and digital assets and allowed retail investors to continuously track coupon payments and the environmental impact of the financed projects. Following the successful conclusion of Project Genesis 1.0, in October 2022, Project Genesis 2.0, which involved developing prototypes for tracking, delivering, and transferring digitised carbon forwards, was also successfully completed.<\/p>\n<p>In February 2023, the Hong Kong Government issued the world\u2019s first tokenised governmental green bond. All coupon payment, settlement of trading and redemption are to be conducted through an online tokenisation platform deploying DLT, marking a global milestone in the innovation of green finance and digitalisation of capital markets. To build on the successes of the first issuance, in February 2024, the Hong Kong Government issued its second batch of digital green bonds. The second issuance involved four currency tranches and incorporated multiple technological innovations and achieved new breakthroughs in terms of broadening investor participation and streamlining issuance process. It also represents the first multi-currency digital bond offering in the world.<\/p>\n<p>The regulators\u2019 balanced approach is reflected in the HKMA\u2019s second whitepaper, published in October 2017 (\u201cSecond DLT Whitepaper\u201d), which stresses the importance and value of DLT, while emphasising the attendant operational and legal \/ regulatory risks. This has since been supplemented by a circular on the \u201ckey risk management considerations that the HKMA has regard to when it reviews proposals of authorized institutions involving the use of distributed ledger technology\u201d, published 16 April 2024.<\/p>\n<p>In its 2022 Annual Report, the HKMA stated that it is continuing to develop a roadmap of initiatives to further promote the adoption of fintech in the banking sector, will step up its efforts to research emerging technologies such as blockchain and will continue to work on developing a risk-based regulatory regime for stablecoins. The HKMA\u2019s generally supportive attitude to emerging technologies is informed by its broader Fintech 2030 strategy, which seeks to catalyse the financial sector to adopt various new technologies by 2030. Under the \u201cFintech 2030\u201d strategy, the HKMA will advance initiatives under four strategic pillars: data and payment, artificial intelligence, resilience and tokenisation.<\/p>\n<p>Indeed, recently, in January 2025, the HKMA announced the Supervisory Incubator for DLT to help banks safely adopt DLT, with a particular focus on tokenised deposits and risk management as services move toward production. The incubator will provide banks with supervisory feedback, live trial opportunities, and industry-wide guidance to enhance risk controls and promote best practices in deploying DLT-based solutions. As of 24 October 2025, six banks had launched tokenised deposit services through the incubator.<\/p>\n<p>The SFC has taken a similar position to balancing innovation and opportunities with risks. In a speech delivered in June 2023, the SFC\u2019s CEO noted that, although supportive of the development and use of emerging technologies, \u201c[b]ringing virtual asset service providers into a well-balanced regulatory fold is the only pathway to embrace innovation, instilling trust in the virtual asset ecosystem\u201d. The SFC has spearheaded efforts to develop a new regulatory approach for VAs (see question 2) but has also expressed caution in several circulars and statements warning investors about the risks of investing in cryptocurrencies and other VAs, and of participating in initial coin offerings (\u201cICOs\u201d) and securities token offerings (\u201cSTOs\u201d) (see questions 5-11<\/p>\n<p>for further detail). On 19 February 2025, the SFC published its \u201cRegulatory roadmap for Hong Kong\u2019s VA market\u201d (\u201c<strong><b>A-S-P-I-Re Roadmap<\/b><\/strong>\u201d), anchored by the principles of \u201cinvestor protection, sustainable liquidity and adaptive regulation\u201d. In it, emphasis was placed on the importance of \u201capplying TradFi\u2019s compliance rigor to virtual assets and leveraging blockchain-driven innovations to modernise TradFi\u201d.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a central bank digital currency (\u2018CBDC\u2019) project in your jurisdiction? If so, what is the status of the project?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Since June 2021, the HKMA has been exploring the viability and practicality of introducing e-HKD as a retail CBDC, via Project e-HKD. In May 2023, the HKMA launched the e-HKD Pilot Programme which explores potential uses of e-HKD, Hong Kong\u2019s proposed central bank digital currency which leverages the use of blockchain technology for financial transactions. The HKMA has completed Phase I of the programme, studying retail use cases in various areas such as programmable payments, settlement of tokenised assets, and offline payments. Phase 2 commenced in March 2024, which delves deeper into select pilots from Phase 1 where an e-HKD could add unique value, namely programmability, tokenisation and atomic settlement, as well as explore new use cases that have not been covered in the previous phase.<\/p>\n<p>To support the development of the tokenisation market and e-HKD, the HKMA has in March 2024, announced the commencement of a new wholesale central bank digital currency project \u2013 Project Ensemble. It aims to support Phase 2 of the e-HKD Pilot Programme to accelerate the prototyping, development and testing of use cases by pilot participants, as well as facilitate the study of interoperability and interbank settlement between e-HKD and other forms of tokenised money. To facilitate instant cross-border payments and settlements using CBDCs, BIS Hub, the HKMA along with other project participants have been developing a CBDC platform shared among participating central banks and commercial banks, built on DLT \u2013 Project mBridge. A platform based on a new blockchain \u2013 the mBridge Ledger \u2013 was built to support real-time, peer-to-peer, cross-border payments and foreign exchange transactions. In June 2024, the HKMA announced that the project has reached the minimum viable product stage. The platform can now undertake real-value transactions (subject to jurisdictional preparedness) and is also compatible with the Ethereum Virtual Machine. In September 2024, the project has been renamed as Project e-HKD+, as the project expands its coverage from e-HKD only to a more comprehensive exploration of the digital money ecosystem. Under the e-HKD Pilot Programme Phase 2, the HKMA works closely with the industry to explore different innovative use cases for new forms of digital money, including e-HKD and tokenised deposits, that can potentially be used by individuals and corporates. A total of 11 groups of firms from various sectors have been selected to conduct pilots to explore innovative use cases across three main themes, namely settlement of tokenised assets, programmability and offline payments.<\/p>\n<p>Since reaching the minimum viable product stage, activity on Project mBridge has accelerated significantly under the leadership of the participating central banks, with the platform processing more than four thousand cross-border transactions with a cumulative value of approximately USD 55.49 billion.<\/p>\n<p>The HKMA published the \u201ce-HKD Pilot Programme Phase 2 Report\u201d in October 2025. Based on these findings, the HKMA has therefore concluded that the immediate priority for the e-HKD lies in work for financial institutions in wholesale payments.<\/p>\n<p>Separately, the HKMA and the PBoC have continued to develop the cross-boundary e-CNY pilot in Hong Kong. By the end of January 2026, around 80,000 e-CNY wallets had been registered using Hong Kong mobile numbers, and the number of local retail merchants accepting e-CNY had grown from around 300 to approximately 5,200. The HKMA and PBoC are also exploring raising the wallet transaction and balance caps and broadening wallet functionality.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and decentralised finance (\u2018DeFi\u2019) for the purposes of financial regulation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Treatment of cryptoassets<\/strong><\/p>\n<p>Regulators have taken an active interest in and proactive approach to regulating VAs, including cryptoassets in Hong Kong.<br \/>\nWhere digital tokens fall within the definition of \u201csecurities\u201d, the regulatory framework for traditional securities applies and, accordingly, dealing in or advising on, or managing or marketing a fund investing in, or providing automated trading services in respect of, such digital tokens may constitute a regulated activity requiring licensing by or registration with the SFC, unless an exemption applies.<\/p>\n<p>Where digital tokens fall outside the definition of \u201csecurities\u201d, the VA-specific regulatory frameworks for VATPs and stablecoin issuers may apply. Further VA-specific regulatory frameworks for providing dealing, advisory, management and custodian services have been proposed by the FSTB and SFC, with a view to introducing a bill to the Legislative Council in 2026. At present, licensed intermediaries engaging in certain VA-related activities (such as dealing, advising and managing) are required to comply with the requirements set out in the SFC-HKMA Joint Circular. For further details, please refer to question 2 above.<\/p>\n<p><strong>Cryptocurrencies as currency?<\/strong><\/p>\n<p>Hong Kong regulatory authorities have consistently affirmed that cryptocurrencies, such as Bitcoin, are not legal tender and should not be characterised as currency. The 2022 FSTB Policy Statement states that VAs and cryptocurrencies cannot serve as legal tender in Hong Kong, \u201cas they are not by law regarded as valid and legal means of payment to adequately and effectively fulfil payment obligations\u201d.<\/p>\n<p>In a circular to authorized institutions published in March 2019, the HKMA endorsed the Basel Committee on Banking Supervision\u2019s statement on crypto-assets and stated that it expects authorized institutions to take note of the prudential expectations regarding banks\u2019 exposures to crypto-assets and related services. The HKMA further noted that authorized institutions planning to engage in VA-related activities should first discuss with the HKMA and demonstrate that they have put in place appropriate systems and controls to identify and manage risks, highlighting that crypto-assets do not reliably provide the standard functions of money and are unsafe to rely on as a medium of exchange or a store of value.<\/p>\n<p>Other statements by public bodies such as the Hong Kong Police Force (\u201cHKPF\u201d), Customs and Excise Department and the HKMA confirm their view that VAs and cryptocurrency should be understood as \u201cvirtual commodities\u201d rather than currency.<\/p>\n<p>The Hong Kong Government, in collaboration with relevant regulators, has also been exploring options to develop a retail CBDC (see question 4).<\/p>\n<p>Treatment of DeFi<\/p>\n<p>There is currently no specific regulatory framework for DeFi in Hong Kong. However, as the SFC explained in a keynote speech in April 2023, the approach will be the same as those applicable to a traditional finance activity, under the \u201csame business, same risk, same rule\u201d principle. This means that for example, if a decentralised platform allowed trading in VA which constitutes securities or futures as defined under the SFO, then the platform and its operators may be required to be licenced. Likewise, offer of collective investment schemes to the public in Hong Kong via DeFi liquidity pooling protocol which falls under the definition of CIS may also be subject to regulations.<\/p>\n<p>The June 2024 report released by Hong Kong Institute for Monetary and Financial Research, the research arm of the Hong Kong Academy of Finance titled \u201cDecentralised Finance: Current Landscape and Regulatory Developments\u201d also suggested several areas of research which will inform a well-defined and comprehensive regulatory framework in regards DeFi. They include: (i) increasing accountability of entities and actors operating DeFi protocols by introducing or amending legal frameworks to recognise and define such entities; (ii) ensuring enforceability of smart contracts by developing safeguards for the automated nature of DeFi protocols;<br \/>\n(iii) enhancing global coordination to address regulatory arbitrage and data gaps in the DeFi markets; and (iv) increasing financial stability by ascertaining the interconnections between centralised intermediaries and DeFi entities. As such, it remains to be seen how regulations will expand and adapt to mitigate emerging risks posed by DeFi.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and DeFi for the purposes of anti-money laundering and sanctions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Hong Kong public bodies have been warning the public about the risks posed by VAs and cryptoassets since 2014. Having long recognised the heightened AML and CTF risks posed by cryptoassets and other VAs, in November 2020 the FSTB published a consultation paper on legislative proposals to enhance AML and CTF regulation in Hong Kong through the introduction of, amongst other measures, a new licensing regime for VATPs. The gazetted amendments to the AMLO came into effect on 1 June 2023.<\/p>\n<p>Further details of the licensing regime now in force can be found at question 2. Licensed VATPs will be subject to the AML and CTF requirements of the AMLO, including customer and counterparty due diligence, ongoing transaction monitoring and record-keeping requirements set out in Schedule 2. Licensees must also comply with the \u201cTravel Rule\u201d, which requires VATPs to gather, and make available to counterparties, certain key information to facilitate sanctions screening and transaction monitoring. In the case of misconduct by a regulated person in relation to such matters, the SFC may impose a fine up to the greater of a maximum of HKD 10 million, or three times the profit gained or loss avoided.<\/p>\n<p>A licensed stablecoin issuer must comply with AML\/CTF requirements relating to risk assessment, AML\/CFT systems, customer due diligence and ongoing monitoring, among others. It should be noted, in particular, that unless a stablecoin issuer can demonstrate to the HKMA\u2019s satisfaction that risk mitigating measures are effective in preventing and combating ML\/TF and other crimes (and the HKMA expects licensees to adopt a cautious approach in this regard), the identity of each individual stablecoin holder should be verified (whether through the stablecoin issuer itself, an appropriately supervised financial institution or VASP, or a reliable third party). Where a licensee identifies transactions or wallet addresses linked to illicit, suspicious, or sanctioned activity, it must promptly investigate and, if grounds for suspicion exist, file a suspicious transaction report with the JFIU and take appropriate follow-up action.<\/p>\n<p>On the other hand, position regarding the AML and CTF regulation of DeFi is currently not clear, owing to the fact that there is an absence of financial intermediaries in DeFi who are usually responsible for enforcing the required controls.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and DeFi for the purposes of taxation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In March 2020, the Hong Kong Inland Revenue Department (\u201cIRD\u201d) published a revised version of Departmental Interpretation and Practice Note No. 39, which included a new section on digital assets. The Practice Note clarifies that the profits tax treatment of digital assets will depend on their nature and use. While there is currently no tax guidance specifically applicable for DeFi, cryptocurrency transactions which are conducted through DeFi channels would also be caught by the provisions under the Practice Note.<\/p>\n<p>ICOs: The IRD will review an ICO\u2019s white paper and other underlying documents to identify the rights and benefits (e.g., equity interests or a right to access to a future service similar to a voucher) attached to the digital tokens. The tax treatment of the proceeds from an ICO will generally follow from these attributes (and not the form) of the tokens issued.<\/p>\n<p>Digital assets held for investment: If digital assets are bought for long-term investment purposes (i.e., as capital assets), any profits upon disposal of such assets are exempt from profits tax. Whether the digital assets are treated as capital assets or trading stock depends on the specific facts and circumstances.<\/p>\n<p>Cryptocurrency: Hong Kong-sourced profits from cryptocurrency business activities are chargeable to profits tax. Whether the buying and selling, exchange or mining of cryptocurrency amounts to the carrying on of a trade or business is a matter of fact and degree to be determined upon consideration of all the circumstances (e.g., the degree and frequency of the activity, its purpose, and its level of organisation).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to retail and wholesale tokenisation projects?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong><em><i>Currency<\/i><\/em><\/strong><\/p>\n<p>Retail tokenisation was explored by the HKMA in June 2021 through Project e-HKD (for more details please see question 4). In October 2025, the HKMA concluded that the immediate priority for e-HKD lies in wholesale payments, not retail use cases.<\/p>\n<p>Wholesale tokenisation has been explored by the HKMA with Project Ensemble (for more details please see question 4) to explore innovative financial market infrastructure. The project sits within the HKMA\u2019s broader \u201cFintech 2030\u201d strategy (for more details please see question 3).<\/p>\n<p><strong><em><i>Investment products<\/i><\/em><\/strong><\/p>\n<p>For investment products, the overarching regulatory principle adopted by the SFC and the HKMA is &#8220;same business, same risks, same rules&#8221;, which means that tokenisation is generally treated as a &#8220;wrapper&#8221; around existing financial instruments, and whatever regulations would apply to the underlying product absent the tokenisation layer continue to apply in full. The SFC has been explicit that its regulatory approach does not create a bespoke regime for tokenised products and the existing legal and regulatory requirements applicable to traditional securities apply equally to their tokenised counterparts. However, the tokenisation wrapper may give rise to additional requirements that reflect the new risks introduced by the use of distributed ledger technology (DLT).<\/p>\n<p>For tokenised securities distributed to investors, the SFC and HKMA have also imposed additional investor protection measures on top of the standard complex product requirements. In particular, VA-related products (including tokenised securities) will generally be considered complex products, and intermediaries distributing them must comply with the SFC&#8217;s requirements on the sale of complex products.<\/p>\n<p>A recent illustrative example was the launch of tokenised concert stakes by Esperanza Fintech (Securities) Limited (Esperanza Securities) in early 2026. On 13 February 2026, Esperanza Securities received a &#8220;no further comment&#8221; letter from the SFC in relation to its proposal to tokenise managed funds, effectively constituting formal permission to conduct tokenised investment businesses. Esperanza Securities is licensed under the Securities and Futures Ordinance to carry out Type 4 (advising on securities) and Type 9 (asset management) regulated activities.<\/p>\n<p>Following the SFC\u2019s green light, Esperanza Securities launched the first tokenised investment for live entertainment in Asia Pacific. The model enables Esperanza Securities to issue investment tokens through an investment fund it manages, allowing eligible investors to participate in concert revenue with a significantly lower entry barrier and to trade the tokens on secondary markets.\u00a0 The initial tokenised entertainment investments included the Chris Wong 40th Anniversary Concert in Hong Kong (6\u20137 March 2026) and a Korean boy band concert in Kuala Lumpur, Malaysia (11 April 2026).\u00a0 The investment tokens derive their returns from concert revenue streams, including box office receipts, sponsorships, and merchandise.<\/p>\n<p>In April 2026 the SFC published a circular introducing a new regulatory framework to pilot the secondary trading of tokenised SFC-authorised investment products. The SFC&#8217;s new guidance is primarily designed to enable secondary trading of tokenised SFC-authorized open-ended funds on SFC-licensed VATPs. The SFC has also left the door open to approving over-the-counter secondary trading arrangements on a case-by-case basis.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any prohibitions on the use or trading of cryptoassets in your jurisdiction? If permitted, is cryptoasset trading common?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong><em><i>Trading of cryptoassets in Hong Kong<\/i><\/em><\/strong><\/p>\n<p>Under Hong Kong\u2019s regulatory framework, intermediaries providing certain VA-related services are required be licensed. For further details, please refer to questions 2 and 5. The use and trading of VAs by investors, on the other hand, are not generally prohibited per se. Investors are encouraged to engage licensed intermediaries in conducting any trading of VAs, and the SFC regularly cautions investors against trading As on unregulated VATPs, noting that investors risk losing their entire investment held on the platform if it ceases operation, collapses, is hacked or otherwise suffers from any misappropriation of assets.<\/p>\n<p><strong><em><i>Rise of cryptoasset trading in Hong Kong<\/i><\/em><\/strong><\/p>\n<p><em><i>\u00a0<\/i><\/em>A joint report published in January 2020 by PricewaterhouseCoopers (\u201cPwC\u201d) and Crypto Valley (see question 10) ranked Hong Kong as one of the leading token-offering jurisdictions worldwide throughout 2018 and 2019 in terms of funding volume and number of completed offerings. The June 2021 report by the International Monetary Fund (\u201c2021 IMF Report\u201d) found that in a 2019 ranking of jurisdictions by cryptocurrency exchanges, Hong Kong was identified as the fourth largest, with 22 exchanges, ahead of Singapore.<\/p>\n<p>According to a June 2022 report by Chainalysis, as of June 2022, annual transaction volume in Hong Kong had grown 9.5% year-on-year (from VAs received by Hong Kong market participants with a value of nearly USD60 billion to over USD 65 billion). Most transactions in East Asia were of an amount equivalent to at least USD 1 million, with \u201cretail\u201d transactions (i.e., equal to or lesser than the equivalent of USD 10,000) making up less than 10% of transaction volume. Nonetheless, with the recent shift towards clearer regulations for retail investors trading digital assets in Hong Kong following the coming into force of the new VATP regime (see questions 2 and 5-6), local retail demand for cryptoasset trading may rise.<\/p>\n<p>According to statistics compiled by the Legislative Council Commission, during 2018-2024, the cryptocurrency market has expanded by 24 times to reach US$3.3 trillion (HK$25.9 trillion), equivalent to 2.6% of conventional equity market capitalisation.<\/p>\n<p>Following a statement published by the SFC in October 2022, setting out regulatory requirements and expectations for VA exchange traded funds (\u201cETFs\u201d) that obtain exposure to VAs primarily through futures contracts, two such ETFs were listed on the HKEX in December 2022, which became the first Asian exchange to offer such products. The ETFs track standardised, cash-settled Bitcoin futures contracts and Ether futures contracts traded on the Chicago Mercantile Exchange. Following the success of the two VA futures ETFs, the HKEX has also welcomed the listing of Asia\u2019s first spot VA ETFs in April 2024. In the first quarter of 2024, the combined average daily turnover for Hong Kong\u2019s listed VA Futures ETFs reached HKD 51.3 million, up from HKD 8.9 million a year earlier. Additionally, the VA futures ETFs attracted HKD 529 million in net inflows during the first quarter of 2024, demonstrating a strong interest in virtual asset trading in Hong Kong.<\/p>\n<p>The SFC published staking guidance for licensed VATPs and SFC-authorised VA Funds on 7 April 2025, focusing on the need for adequate internal controls to safeguard staked assets, the disclosure of information about staking services and any possible risks, as well as the need for due care to be exercised when selecting a blockchain protocol to provide the underlying staking service. On 22 April 2025, two Hong Kong-domiciled spot Ether ETFs were approved for use in staking activities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent have initial coin offerings (\u2018ICOs\u2019) taken place in your jurisdiction and what has been the attitude of relevant authorities to ICOs? If permissible, what are the key requirements that an entity would need to comply with when launching an ICO?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Hong Kong had previously emerged as a leading Asian ICO hub, due to, amongst other factors, the PBoC\u2019s announcement in September 2017 of an outright ban on ICOs in China.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any legal or regulatory issues concerning the transfer of title to or the granting of security over cryptoassets?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The extent to which legally effective transfers of title to, or granting of security over, legal tokens and VAs can be achieved will depend primarily on whether such tokens and VAs constitute \u201cproperty\u201d under Hong Kong law.<\/p>\n<p>Recently, the Court of First Instance clarified in Re Gatecoin Limited (in liquidation) [2023] HKCFI 91 that cryptocurrencies fulfil the necessary criteria to be considered \u201cproperty\u201d and are capable of being held on trust. The Court applied the four criteria for \u201cproperty\u201d set out in National Provincial Bank v Ainsworth [1965] AC 1175 to cryptocurrency, concluding that cryptocurrency satisfied the requirements of being: (i) definable; (ii) identifiable by third parties; (iii) capable of assumption by third parties; and (iv) having some degree of permanence or stability.<\/p>\n<p>Several other first instance judgments handed down since 2020 have already treated cryptocurrencies as property for the purposes of proprietary injunctive relief (see: Nico Constantijn Antonius Samara v Stive Jean- Paul Dan [2021] HKCFI 1078; Yan Yu Ying v Leung Wing Hei [2021] HKCFI 3160; and Huobi Asia Ltd &amp; Anor v Chen Boliang &amp; Anor [2020] HKCFI 2750).<\/p>\n<p>Whilst the reported cases dealing with VAs in Hong Kong were concerned with their treatment in the context of insolvency or injunctive relief rather than issues of conveyancing or security, on the basis of VAs constituting property under Hong Kong law, it should be possible (subject to the terms of such assets) to transfer legal title to, and to grant security over, VAs in the same way as other intangible property.<\/p>\n<p>In the 2022 FSTB Policy Statement, the Hong Kong Government acknowledged that the unique characteristics of VAs \u201cmay not fit squarely into the current private property law categories or definitions in Hong Kong\u201d and noted that it was open to future review of property rights regarding tokenised assets.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are smart contracts characterised within your legal framework? Are there any enforceability issues specific to the operation of smart contracts which do not arise in the case of traditional legal contracts?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The HKMA\u2019s Second DLT Whitepaper, reflecting input from the Technology Committee of The Law Society of Hong Kong, defines a smart contract as an arrangement whereby autonomous software running on a DLT platform automatically exchanges assets that are stored or represented on the DLT platform.<\/p>\n<p>Whether a smart contract can be considered a legal contract is still a point of open discussion. The Second DLT Whitepaper notes that smart contracts should not be understood simply as contractual documents in digital form. While a smart contract usually contains the mechanics for execution, performance, and enforcement, it may not contain the entirety of the terms forming a contract at law. Using a smart contract without explicit contractual terms to completely replace a legal contract could cause uncertainty for participants in the event of unforeseen consequences or disputes.<\/p>\n<p>There may, however, be other ways to characterise a smart contract and its relationship with relevant stakeholders that do give rise to legal recourse. Legal rights and remedies could arise from a separate legally binding contract, such as for securities trading on an exchange or Decentralised Autonomous Organisation (\u201cDAO\u201d), or other grounds, such as negligence, unjust enrichment and\/or breach of fiduciary duties. Remedies founded in unjust enrichment may be available to effect the restitution of unjust gains resulting from a breach of a smart contract.<\/p>\n<p>The Second DLT Whitepaper also points to the 2016 DAO Ethereum hack as a reminder that programming \/ modelling errors and other such issues introduce the risk that smart contracts will fail to reflect the intention of their creators. Steps must therefore be taken to ensure that, if an undesirable consequence should occur, there is already a pre-agreed governance structure and contractual framework in place to handle the situation.<\/p>\n<p>Furthermore, the smart contract should contain an \u201cescape hatch\u201d or clean path for modifying and undoing the smart contract in light of unforeseen eventualities, which would allow human intervention under strict conditions (e.g., all party approval) without realistically threatening the immutability of the smart contract.<\/p>\n<p>Given the underlying risks, the Law Society of Hong Kong has recommended that smart contracts should be adopted only if their design follows the latest best practices and international standards, such as the \u201cescape hatches\u201d referred to above, and that parties should use them only having evaluated the accompanying risks.<\/p>\n<p>In March 2025, the HKMA in collaboration with the SFC, IA and Mandatory Provident Fund Schemes Authority released a research paper on \u201cDistributed Ledger Technology in the Financial Sector: A Study on the Opportunities and Challenges\u201d, which noted that while smart contracts are a crucial component of many DLT networks, they pose significant risks, including inherent coding vulnerabilities and oracle concentration risks. Automatic execution, speed and reliance on external information means that a single point of failure or corruption may impede the accurate functioning of smart contracts, and they are also vulnerable to be exploited by malicious actors. Therefore, the HKMA recommends financial institutions to carefully consider use cases for smart contracts, as they may not be feasible for all business scenarios.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are Decentralised Autonomous Organisations (\u2018DAOs\u2019) treated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The treatment of DAOs is still under consideration by Hong Kong courts and regulators. However, a landmark decision Mantra DAO Inc. and Another v. John Patrick Mullin and Others [2024] HKCFI 2099 has been issued addressing DAO operators\u2019 duties to maintain proper accounts. The substantive hearing and decision regarding the DAO\u2019s ownership, management and control is still pending.<\/p>\n<p>The case concerned a DAO governed as follows: decision making over assets of the DAO lie ultimately with the holders of digital tokens (\u201cOM Tokens\u201d). As a DAO lacks legal personality, legal entities are set up specifically for holding assets for the benefit of OM Token holders, which are in turn governed by members of its council (\u201cCouncillors\u201d). Councillors are elected by OM Token holders periodically.<\/p>\n<p>The courts found that the Councillors had a duty to keep proper accounts of the DAO\u2019s business operations. The court issued interim relief against the Councillors, mandating disclosure of the DAO\u2019s financial records to the Plaintiffs who initially conceived and set up the DAO project. The decision serves as a reminder for those operating DAOs about their obligations to maintain proper accounts, that they also owe disclosure obligations to relevant stakeholders.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have there been any governmental or regulatory enforcement actions concerning blockchain in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The SFC has been active in taking enforcement action against cryptocurrency exchanges and issuers.<\/p>\n<p>In September 2023, the SFC issued the JPEX Statements, warning the public regarding JPEX and clarifying that no entity in the JPEX group is licensed by the SFC or has applied to the SFC for a licence to operate a VATP in Hong Kong, as well as flagging a number of suspicious features about the practices of JPEX and those actively promoting JPEX to the Hong Kong public. The SFC subsequently revealed that JPEX is suspected of fraud and that this matter has been referred by the SFC to the police. As mentioned in question 2 above, on 29 September 2023, following the publication of the JPEX Statements and as part of SFC\u2019s efforts to disseminate information on VATPs in a clear, transparent and timely manner, the SFC published several lists of VATPs on its website.<\/p>\n<p>In August 2023 and June 2024, the SFC issued warning statements in relation to (a) misleading claims by certain unlicensed VATPs that they have submitted licence applications to the SFC despite not having done so, (b) activities that would not be permitted under the new licensing regime and (c) suspected fraudulent VA related activities (see question 9).<\/p>\n<p>In July 2021, the SFC published a statement warning that it was aware that Binance had offered trading services in stock tokens in several jurisdictions and that it was concerned such services may also be offered to Hong Kong investors. The SFC emphasised that no entity in the Binance group was licensed or registered to conduct a regulated activity in Hong Kong and that it \u201c[would] not hesitate to take enforcement action against unlicensed platform operators where appropriate\u201d.<\/p>\n<p>As described in question 9, in March 2018 the SFC confirmed that ICO issuer Black Cell had halted its ICO to the Hong Kong public and agreed to unwind ICO transactions for Hong Kong investors, following regulatory action by the SFC over concerns that Black Cell had potentially engaged in unauthorized promotional activities and unlicensed regulated activities. As discussed at question 9, the SFC had previously noted it had written to seven cryptocurrency exchanges warning them that they must not trade cryptocurrencies constituting \u201csecurities\u201d without a licence.<\/p>\n<p>Other authorities have also taken action on VA-related offences. In February 2019, the HKPF arrested Wong Ching-Kit, better known as \u201cCoin Young Master\u201d, and his colleague for (among other offences) conspiracy to defraud investors through so-called cryptocurrency \u201cmining machines\u201d sold by the pair relating to the cryptocurrency Filecoin. In July 2021, the Customs and Excise Department investigated its first case of a suspected money laundering syndicate involving virtual currencies.<\/p>\n<p>There were more than 1,400 reports of VA-related crimes in Hong Kong in the first eight months of 2025. In October 2025, the Virtual Asset Intelligence Task Force (VAIT) was launched. VAIT led by the Hong Kong Police Force, and bringing together the HKMA, the SFC, the Customs and Excise Department and licensed VATPs. VAIT enhances real-time information sharing and coordinated enforcement, ensuring the digital asset ecosystem remains safe and compliant.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other generally-applicable laws, case law or regulations that may present issues for the use of blockchain technology (such as privacy and data protection law or insolvency law)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The HKMA\u2019s Second DLT Whitepaper, published in October 2017, identified seven broad legal issues arising from the use of DLT, namely: (i) legal basis (validity and enforceability); (ii) data protection and privacy (accessibility, immutability and cross-border considerations); (iii) cross-border and localisation issues (cross-border data flow, legal enforceability and localisation law); (iv) smart contracts (legal basis and effects); (v) liability (governance models and liability of participants); (vi) competition \/ antitrust laws (fair competition and antitrust practice); and (vii) legal issues in specific applications (asset management, mortgages \/ e-conveyancing, trade finance and digital ID management).<\/p>\n<p>On privacy and data protection, the Second DLT Whitepaper explained that the three key characteristics of DLT that need addressing under the Personal Data (Privacy) Ordinance (Cap. 486) are: (i) the accessibility of certain DLT platforms, in which all nodes have equal access to all stored personal data regardless of whether they need to see it; (ii) the immutability of stored data, whereby data cannot be amended or erased; and (iii) the often cross-border nature of DLT, meaning that personal data may be stored outside Hong Kong. The Second DLT Whitepaper concluded that the simplest way to address privacy concerns appears to be to avoid storing personal data in the ledger, and rather keep only the hashes of personal data there. Storing personal data off-ledger in more conventional databases while keeping hashes in the ledger would ensure data integrity while controlling and limiting access to personal data. It is unclear, however, which steps are being taken to address such concerns.<\/p>\n<p>The recent research paper on Distributed Ledger Technology in the Financial Sector: A Study on the Opportunities and Challenges, published by the HKMA in collaboration with the SFC, IA and Mandatory Provident Fund Schemes Authority in March 2025, noted that the adoption of DLT initiatives was still being met with resistance, citing issues such as the emergence of novel risks and lack of strategic alignment between stakeholders. Furthermore, 53% of respondents to the HKMA Fintech Adoption Study (2023) noted the \u201cpresence of legal and regulatory hurdles\u201d as an adoption challenge, and that \u201cuncertainties still prevail regarding legal definitions, the legality of activities, and compliance requirements across different jurisdictions\u201d.<\/p>\n<p>The use of blockchain technology, in particular cryptocurrencies and other VAs, also raises obvious AML and CTF concerns given the unregulated nature of many parts of the industry. As noted by the HKMA\u2019s then-Chief Executive in a speech given on September 2018, as many crypto-assets are designed such that anonymous email accounts can be used for trading and transfers without a central clearing agent, they effectively bypass the existing regime to combat money laundering and terrorist financing. Banks and other regulated financial institutions have, therefore, found it difficult to comply with statutory or supervisory know your customer (KYC) requirements. As discussed at questions 2 and 6, the AMLO was amended partly in response to such concerns.<\/p>\n<p>Cryptocurrencies and other VAs also present potential problems in the context of insolvency law, in particular with respect to asset tracing and the appropriate legal treatment of cryptocurrencies (see question 11).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other key issues concerning blockchain technology in your jurisdiction that legal practitioners should be aware of?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The regulatory environment concerning VAs is consistently developing in Hong Kong, with the most recent significant development being the new licensing and regulatory regime for stablecoin issuers that came into force on 1 August 2025 and the proposed VA dealing, advisory, management and custodian regimes discussed in question 2. Legal practitioners would be advised to follow the most recent developments.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">8585<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/151320","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=151320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}