Hong Kong crypto licensing overhaul draws industry concern
New proposals may require full crypto licences for minimal exposure, raising concerns over compliance costs and reduced experimentation.
Hong Kong’s proposed crypto licensing overhaul has drawn criticism from industry leaders, who warn it could disrupt compliant firms and deter blockchain exposure.
Under the proposals, the existing allowance enabling firms to allocate up to 10% of fund assets to crypto without additional licensing would be removed. Even minimal exposure would require a full licence, a move the association called disproportionate and harmful to market experimentation.
Concerns also focused on the absence of transitional arrangements. Without a grace period, firms may be forced to suspend operations while licence applications are reviewed.
The association proposed a six- to 12-month transitional window to allow continued activity during regulatory processing.
Further criticism focused on custody rules restricting client assets to SFC-licensed custodians. Industry representatives warned the measure could limit access to early-stage tokens, restrict Web3 investment, and impose unnecessary geographic constraints.
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