Hong Kong-licensed crypto firms will face stricter reporting rules, a move regulators believe will improve “market integrity” and confidence.
In a joint statement on the 28th of September, Hong Kong’s Securities and Futures Commission (SFC) and Accounting and Financial Reporting Council (AFRC) signed an agreement to officially bring crypto firms under the traditional reporting framework.
According to the arrangement, SFC-licensed virtual asset service providers (VASPs) will be strictly audited, covering corporate balance sheets, proof-of-reserves, and internal compliance reporting.
Additionally, the framework provides an avenue for regulatory inspections and investigations for compliance.
It (MoU) establishes a comprehensive framework for information sharing, case referrals, mutual assistance, and coordinated inspections and investigations in matters of mutual regulatory interest.
Overall, this will optimize market oversight. Notably, Ms. Julia Leung, SFC CEO, echoed a similar stance, citing the need to “evolve with market dynamics.”
This MoU ensures our supervision evolves with market dynamics. Deepening our regulatory cooperation across financial sub-sectors is essential to upholding the quality of financial reporting and bolstering the confidence of global investors in Hong Kong’s regulatory system.
Hong Kong’s evolving crypto market and rules
Digital assets have increasingly become entrenched in Hong Kong’s mainstream financial system. Its stablecoin licensing framework kicked off earlier this year. The clarity has seen global players such as Standard Chartered offer support to some regulated Hong Kong dollar-denominated stablecoins for payments.
Perhaps the most aggressive sign yet is its tokenization push. Hong Kong has been a top pioneer of tokenized bonds and has offered billions of dollars of the same through blockchains. Since 2023, it has offered nearly $4B in public sector and tokenized digital bonds.
In fact, it was this experience in tokenized bonds that led Pakistan to recently reach out to Hong Kong to gain technical and regulatory expertise in rolling out a similar service.
As such, it’s not surprising that crypto firms have been brought under reporting frameworks that cover traditional firms. Across the APAC region, Hong Kong is among the top countries in terms of crypto adoption as of 2025.
However, the massive crypto adoption has also come with stricter rules. The authorities argue that it helps curb anti-money laundering, and tax evasion, helping law enforcement investigate crimes in the sector.
In March, Hong Kong expanded police powers to access encrypted devices, raising privacy concerns for crypto users. The latest crypto reporting rules also point in the same direction. For the regulators, however, the move will enhance “market integrity” and confidence for global investors.
Final Summary
- Hong Kong regulators have brought crypto firms under the broader financial system’s audited reporting framework
- SFC CEO said the move was aimed at meeting “evolving market dynamics” as crypto becomes entrenched in financial markets.
