Hong Kong Charts Course for Crypto Regulation as Industry Voices Concerns

Hong Kong’s approach to digital asset oversight gained renewed attention recently when the city’s finance chief unveiled the region’s regulatory vision on an international platform. At the World Economic Forum gathering in Davos, Financial Secretary Paul Chan Mo-po presented Hong Kong crypto strategy as a model balancing market innovation with financial stability—a delicate equilibrium the government believes will position the territory as a competitive fintech destination.

Government’s Framework: “Same Rules Across the Board”

Chan emphasized that Hong Kong’s regulatory principle rests on a straightforward premise: equivalent activities facing equivalent risks should receive equivalent oversight. Rather than viewing regulators as gatekeepers, officials frame their role as market facilitators, using policy design and enforcement to demonstrate how responsible development can thrive.

The finance chief highlighted several advantages digital assets could unlock—increased market transparency, strengthened risk management infrastructure, and accelerated capital flow efficiency. These capabilities, Chan argued, justify Hong Kong’s investment in establishing a coherent digital asset ecosystem.

Tokenisation Progress Signals Hong Kong’s Fintech Ambitions

Hong Kong has already moved beyond rhetoric into action. Since 2023, the government completed three rounds of tokenised green bond issuance, accumulating US$2.1 billion in volume. More significantly, the Hong Kong Monetary Authority launched a pilot initiative in late 2025 enabling genuine transactions through tokenised deposits and digital assets—a tangible demonstration of how blockchain infrastructure can integrate into mainstream financial operations.

Such initiatives underpin Hong Kong’s self-positioning as Asia’s premier crypto and fintech hub, backed by concrete policy deployment rather than aspirational statements alone.

Regulatory Tightening Creates Friction with Asset Managers

Yet not everyone views these developments as progress. This week, the Hong Kong Securities and Futures Professionals Association formally registered objections to upcoming regulatory amendments, citing potential unintended consequences.

The specific flashpoint centers on a proposed elimination of the “de minimis” exemption—a rule allowing Type 9 licensed asset managers to allocate up to 10% of fund assets to digital currencies without obtaining separate approvals, provided authorities received notification. Under the revised framework, any cryptocurrency exposure, regardless of scale, would necessitate full licensing.

The association warned that stricter thresholds could discourage traditional asset managers from experimenting with modest crypto allocations. Rather than attracting institutional participation, tighter restrictions risk creating compliance friction that makes exploration economically untenable for smaller-scale initiatives.

Additional Headwinds: Custody and Reporting Standards

The de minimis change represents only one piece of a broader regulatory overhaul. Hong Kong authorities simultaneously proposed strengthening custody safeguards and implementing the OECD-aligned Crypto-Asset Reporting Framework—a comprehensive reporting standard expanding regulatory oversight into previously unmonitored market segments.

Hong Kong legal counsel at JunHe LLP characterized these combined amendments as marking a substantial recalibration of regulatory expectations, potentially imposing material compliance burdens on financial firms.

Where Hong Kong Crypto Regulation Heads Next

The government’s WEF intervention signals resolve to advance crypto oversight while maintaining market competitiveness. Whether proposed frameworks succeed in achieving both objectives remains an open question. Industry feedback will likely shape final implementation details, though regulators appear committed to moving forward with tighter guardrails even if some traditional institutions resist the transition.