Hong Kong just told every crypto advisor and fund manager operating in the city: get licensed or get out. The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) published consultation conclusions on May 26 confirming a new licensing regime for virtual asset advisory and management services, with legislation expected to hit the Legislative Council in 2026.

The framework isn’t a suggestion. It comes with specific capital requirements, no grandfather clause for existing operators, and a clear message that digital asset services will be held to the same standards as their traditional finance counterparts.

What the new rules actually require

The regime creates two distinct licensing tracks under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). One covers advisory services, meaning firms that recommend or analyze virtual asset acquisitions and disposals. The other covers management services, which refers to discretionary portfolio management of digital assets.

The advisory license mirrors the existing Securities and Futures Ordinance (SFO) Type 4 license for advising on securities. The management license mirrors the SFO Type 9 license for asset management.

The capital requirements are where things get concrete. Firms will need HK$5 million in paid-up capital as a baseline. For liquid capital, the threshold splits depending on whether a firm holds client assets. Those that don’t must maintain at least HK$100,000 in liquid capital. Those that do must keep HK$3 million on hand.

The consultation itself closed on January 23, 2026, and the published conclusions confirm that the market broadly supports the proposed approach. The operating principle, as regulators describe it, is “same business, same risks, same rules.”

No transition period, no exceptions

There are no transitional “deeming” arrangements in the proposal. That means firms currently offering virtual asset advisory or management services won’t automatically receive temporary permission to keep operating while their applications are processed.

Instead, the SFC is encouraging existing and prospective service providers to begin pre-application discussions with the regulator now.

SFC CEO Julia Leung framed the consultation conclusions as a step toward aligning virtual asset regulation with traditional financial services standards, with an emphasis on investor protection alongside responsible innovation.

Why this matters for the broader market

Hong Kong has been methodically building out its crypto regulatory framework over the past several years. The city introduced a licensing regime for virtual asset trading platforms under AMLO in 2023, and several exchanges have since obtained or applied for licenses. The advisory and management regime represents the next logical expansion, covering the services that sit upstream and alongside trading.

For investors, the clearest implication is that virtual asset advisory and management services in Hong Kong should become more standardized. Licensed firms will face ongoing compliance obligations, capital adequacy monitoring, and regulatory oversight.

The absence of transitional arrangements adds urgency to an already tight timeline. With comprehensive legislation expected to be introduced in the Legislative Council this year, the SFC’s invitation for pre-application discussions isn’t a courtesy. It’s a countdown.