Hong Kong’s Securities and Futures Professionals Association has urged the Securities and Futures Commission (SFC) to refine its virtual asset regulatory framework. The group wants lower compliance costs, improvements to the Virtual Asset Platform Practitioner Examination (CVAP), and clearer guidance on several regulatory issues.
The requests followed a recent meeting between the association and Hong Kong financial regulators. Participants included Under Secretary for Financial Services and the Treasury Chan Ho-lim and representatives from the SFC’s Intermediaries Division.
According to the association, the SFC agreed to pursue several improvements to the CVAP qualification system. These include separating the examination from mandatory coursework, providing official study materials, and reducing examination fees. The regulator also indicated that candidates may eventually be able to take the exam without first completing training courses.
However, the association said discussions will continue with the SFC and the Financial Services and the Treasury Bureau on unresolved issues. These include self-custody rules for private equity funds, virtual asset payment regulations, and the distinction between technology providers and regulated financial activities.
Industry Seeks Lower Compliance Costs
The association said several parts of Hong Kong’s new virtual asset framework remain too broad. It argued that the lack of clarity is creating operational uncertainty for firms entering the sector.
Among the industry’s concerns is the removal of the previous 10% minimum investment exemption for virtual asset management. The group also criticized the immediate implementation of the new rules without a transition period.
While the framework is now in effect, market participants said key details remain unclear. They are seeking greater clarity on licensing requirements, permitted business activities, and asset allocation rules.
Licensed virtual asset platform operators are also facing rising compliance costs. The association urged regulators to adopt a more flexible approach by reviewing requirements for cold and hot wallet allocations, insurance coverage, hardware encryption, and on-chain transfer procedures.
The group said reducing unnecessary operational burdens would help licensed virtual asset trading platforms remain competitive while maintaining investor protection.
Related: Hong Kong Expands Crypto Tax Reporting to 8,000 More Firms
Calls for Clearer Licensing Guidance
Another major topic was the regulatory treatment of technology companies serving the digital asset industry.
The association asked regulators to clearly distinguish between firms providing technology infrastructure and those carrying out regulated financial activities. It argued that companies that neither hold customer assets nor collect transaction-based fees should not automatically require licenses.
Industry representatives also requested classification guidelines for business models such as software development, technology integration, transaction support, and advisory services. They said clearer definitions would reduce regulatory uncertainty.
Meanwhile, the SFC acknowledged that it is facing staffing shortages and recruitment challenges as virtual asset licensing applications continue to increase. The association urged the regulator to publish clearer approval timelines and milestone-based review processes so companies can better plan staffing and capital allocation.
Industry Wants More Crypto Products
The association also urged regulators to expand Hong Kong’s virtual asset market by speeding up approvals for crypto derivatives.
At present, retail investors can trade only five approved cryptocurrencies: Bitcoin, Ethereum, Avalanche, Chainlink, and Solana. They are also limited to long-only positions and cannot access hedging instruments.
Industry participants believe crypto derivatives would strengthen Hong Kong’s position as a global digital asset hub. They also said the products would give investors more advanced risk management tools.
The meeting also covered the regulation of virtual asset payment businesses. This included firms operating under Money Service Operator (MSO) licenses while facilitating large-scale crypto payment services. The association requested clearer guidance on which regulators oversee these activities and called for a formal implementation roadmap.
In addition, participants discussed operational standards for self-custody arrangements by private equity funds. Topics included asset segregation, access controls, audit requirements, and whether prior notification to Chinese regulators would be required.
Looking ahead, the association and regulators also exchanged views on emerging risks from quantum computing, artificial intelligence governance, and cross-border digital yuan settlements. The association said it will continue offering compliance workshops and policy briefings as Hong Kong’s virtual asset regulatory framework evolves.
