Obtaining a license to exchange cryptocurrencies in Hong Kong

The cryptocurrency trading market is a promising business segment on the World Wide Web. Its popularity is directly proportional to the use of blockchain as a means of payment and a way to save resources. Since tokens systematically confirm a high rating of financial attractiveness, transactions with them are incredibly profitable from a commercial point of view. State regulators have different approaches to the issue of determining the status of cryptocurrencies. The Hong Kong crypto license will allow you to conduct business selling electronic money legally.

As one of the world’s financial centers, Hong Kong actively regulates the token exchange process. Although this tool is often criticized for its potential for the shadow circulation of funds, the government concentrates its efforts on the emphasized transparency of the circulation of monetary units. By following the principles of honest business, you can quickly apply for a crypto license and have income literally out of the blue.

Types of Cryptocurrency Activities in Hong Kong

The policy of regulating the purchase and sale of blockchain in most countries of South Asia developing a legal market economy is the same. Legally, the crypt does not have the status of a means of payment. It is nothing more than an electronic product with all the formal properties of the object of the auction. It can be produced, accumulated, and therefore sold. The price is formed under the influence of demand and market fluctuations.

The commercial success of bitcoin has led to an explosion of new tokens. The electronic trading platforms of the Hong Kong cryptocurrency carry out operations to exchange most of them for another blockchain product and ordinary fiat funds. Regulatory documents distinguish two types of provisions in the official status of the crypt: e-goods and virtual securities. The kind of licensing is determined depending on what product the new financial player intends to operate.

Cryptocurrency regulation in Hong Kong

The SFO is the legislative body that regulates cryptocurrency transactions. The degree of Hong Kong cryptocurrency regulation depends on how cryptocurrency is defined. If the status of a virtual good is given, then licensing is not required for its exchange. If the cryptocurrency in Hong Kong belongs to the level of securities, then it falls under the control of the service, and a license is required for this crypto exchange. The company falls under the Hong Kong sanctions without a crypto license to conduct such transactions.

Also, there is a single FATF system on the region’s territory, which combines many countries of the world. This regulatory body has a set of rules and standards that provides control over cryptocurrency transactions. All crypto exchanges, without exception, must adhere to these standards. Licensing is required if a company is engaged in crypto-operations that have been given the status of securities.

Also, crypto exchanges importing virtual funds worth more than 1,000 dollars or euros need to submit data about their customers and engage in crypto exchanges within the framework of applicable laws in Hong Kong.

The legality of Cryptocurrency Business in Hong Kong

According to Hong Kong laws, the crypto regulations of crypto assets and importers of crypto transactions are carried out by the Securities Supervisory Authority – SFO. Their tasks include analyzing the activities of the crypto exchange and assessing and defining transactions related to crypto imports. A company engaged in the crypto-currency exchange, which belongs to securities, must undergo a licensing process.

If the organization’s transactions are simply virtual currency (not carrying the properties of securities), then a license for crypto activities is not required.

Cryptocurrency exchange license
Also, its functions include the obligation to monitor the availability of a license from firms that import securities-related cryptocurrency. And if there is no crypto license, then the Commission has the right to prohibit the activity of this crypto exchange.

Who regulates cryptocurrencies in Hong Kong?

The Securities and Futures Commission (SFO) regulates cryptocurrency in Hong Kong. It gives some cryptocurrencies the status of “virtual products.” This type of cryptocurrency during the exchange is not regulated by the laws of the administrative district, which means that it does not require the issuance of a license for their interchange. This practice provides excellent opportunities for crypto businesses to exchange virtual currency, which does not have the characteristics of securities. The administrative district authorities do not regulate the possession and transfer of virtual currency between clients for private interests. Such management and trading conditions depend directly on what properties any particular virtual currency carries in itself.

What are the rules for promoting crypto assets in Hong Kong?

Blockchain technologies are used all over the world. The essence of virtual funds operations is the latest technologies that speed up the payment process and minimize transfer costs. Since the anonymity of transactions in the crypto business attracts fraudsters for illegal trading and unwillingness to pay taxes, there are guidelines for conducting crypto business in the administrative district. All these operations are regulated by the FATF, a supervisory body that monitors and blocks financial crimes. The FATF organization includes dozens of countries worldwide, including Hong Kong. Cryptocurrency rules in Hong Kong, which apply to crypto exchanges within its administrative boundaries, are as follows:

  • FATF members are required to provide information about all clients of the crypto-exchange, which concludes transactions from 1000 dollars or euros, including preventing money laundering in the territory of the administrative district;
  • Any crypto-provider must be licensed (SFC) as a provider in the field of cryptocurrencies (VASP) and operate by the laws of Hong Kong.

Cryptocurrency rules must comply with the unified standards system allowing you to control cryptocurrency transactions. All crypto exchanges are required to follow these rules and guidelines. Thanks to the FATF, crypto platforms have a regulated status as providers of crypto goods and services since they are related to virtual funds, which means they must obtain a cryptocurrency license in Hong Kong.

Types of licenses for working with cryptocurrencies in Hong Kong

Based on the standards approved by the FSTB, only those who have registered their company in this administrative region and operate in its territory are eligible to obtain a crypto license. To legally engage in crypto-currency activities, a company must only register a crypto-license in Hong Kong. They are two types:

  • for transferring cryptocurrencies into fiat money, and an MSO License is issued;
  • to conduct transactions with virtual currency that has the properties of securities, they issue an SFC License

Individuals and entrepreneurs are not eligible to obtain this license, and legally engage in the crypto business under the SFC (Hong Kong Securities Regulatory Authority). Also, if the crypto platform is not registered within the administrative borders, conducting transactions with Hong Kong investors is forbidden.

Requirements for obtaining a crypto license in Hong Kong

Activities related to the exchange of virtual currency, which has been assigned the status of “virtual goods,” are not regulated by securities laws and therefore do not require a license to exchange cryptocurrencies.

Whether or not to apply securities laws depends on what characteristics this Hong Kong crypto currency is endowed with. Some tokens are, by their definition, financial instruments (Security Tokens), and to trade them, you need a license for cryptocurrency in Hong Kong. A company planning to distribute them must register a crypto license for securities transactions under the SFO rules.

And brokers who participate in such transactions must adhere to the requirements of the law, namely:

  • Security Tokens may only be sold to professional clients in securities trading;
  • in the process of distribution of ST, brokers need to check such tokens and take into account all the risks for investments;
  • intermediaries and crypto exchanges are required to know all the data/characteristics of this ST.

The regulatory body can include this exchange under sanctions if the requirements are unmet.

Cryptocurrency exchanges that plan to engage in exchanging cryptocurrencies for fiat funds must comply with AML/CFT laws. It means that it is necessary to pass the MSO licensing because this process is directly tied to financial transfers. Although virtual currency is not fiat, its exchange will be considered and regulated by the appropriate legislative body.

Before a crypto site starts its activities, it needs to take into account the main requirements of the FSTB for licensed sites:

  • obtain permission to conduct transactions;
  • appoint persons who will be responsible for executing transactions;
  • have at least two specialists on staff who will be responsible for carrying out operations by the law and prevent transactions that are aimed at laundering financial assets;
  • Exchange staff must be appropriately qualified and tested for professional suitability for their position;
  • members of the company must have no criminal record;
  • the staff of the firm must be checked for the presence in their activities of bankruptcy or liquidation of the firm.

If there are changes in the team within the company or the head/owner of the crypto exchange changes, this must be agreed upon in advance with the Securities Commission.

Hong Kong is quite an attractive territory for starting a business and obtaining a cryptolicense.

The cost of a cryptocurrency license in Hong Kong

When opening a business in Hong Kong, you should be well aware of the features of local legislation. On the one hand, it is loyal to all new companies. On the other hand, financial turnover enjoys increased attention from regulatory authorities:

  1. The authorized capital depends on the volume of services provided.
  2. The more power an organization has in the market, the insurance level should be higher.
  3. To reach a severe level, you should be ready for high turnover, and the client can exchange the blockchain for millions of dollars a day.
  4. The second part is the payment for the license opening. It is the final stage of paperwork, which is performed after passing the appropriate checks. Actual costs may be higher as it is easier to process all permits with a local lobbying representative.

For quite a reasonable remuneration, Hong Kong lawyers prepare the company almost on a turnkey basis, including organizational issues. By attracting a qualified intermediary, you should go if you need to get a working and profitable business and avoid getting stuck on bureaucratic matters. The costs of a crypto license in Hong Kong are necessarily compensated, given the significant turnover of funds.

Cryptocurrency tax in Hong Kong

Taxing commercial activities reasonably in the East Asian sector is the norm in most countries. Hong Kong is no exception, and it has its fiscal system without the influence of the jurisdiction of the PRC. Crypto exchanges only pay fees based on their profits. The percentage of deductions is always the same. This approach allows long-term planning of commercial activities.

When working with blockchain, the issues of transparency and legitimacy of transactions should be in the first place. Otherwise, you may face regulatory sanctions, including fines. In addition, criminal liability is provided for crimes in the illegal circulation of funds.

Hong Kong Cryptocurrency License Benefits

The economic attractiveness of Hong Kong is based on its unique legal status. On the one hand, the region is part of the People’s Republic of China. However, the party monopoly of the leading state of Asia controls only the foreign policy activities of the province. It is responsible for its security with the help of the armed forces. The historical development of the British colony is an explosive mixture of Asian mentality and European profit orientation. Thanks to its favorable geographical position and excellent implementation of the principles of a market economy, Hong Kong has become one of the most dynamically developing countries in the world.

Fierce competition and the desire to take a leading position in the Indo-Pacific forced the government to turn toward the blockchain. As a result, several regulatory documents were adopted that legalized crypto trading. 

Such a move made it possible to open crypto exchanges and trade tokens legally. A crypto currency exchange license is a legal way of doing business under specified conditions.

Services of our company

Understanding the regulation of the crypto industry in different countries is sometimes extremely difficult because each jurisdiction sets its own rules. While crypto assets are banned throughout China, Hong Kong allows crypto organizations to develop and operate legally, subject to obtaining a cryptolicense. The lawyers of our company will tell us more about the regulation of the crypto industry in this region, study your company’s activities and tell us how this jurisdiction suits you. They can also accompany your company at all stages of obtaining a license. They will help you collect the necessary documents, check how your company meets all the requirements of state regulators and will represent your interests.

In the end

If you decide to obtain a work permit in this jurisdiction, it will not be easy. With a legal education, it will be easier to understand all the intricacies of regulation and requirements for crypto organizations. Our experts will help you get a work permit as soon as possible.


The turnover of ordinary tokens in Hong Kong fully meets domestic requirements. It should be remembered that blockchain transactions, which are not equivalent in status to securities, are the usual sale and purchase of property. Even if you do this commercially to make a profit, you do not need to undergo additional checks. To avoid excesses with the local regulator, it is essential to prevent activities with signs of a shadow turnover of funds.

Taxation of legal entities that are owners of crypto exchanges is carried out according to a simplified scheme. The single fiscal rate always remains constant and does not depend on the turnover of the company’s funds.

Hong Kong’s leading licensing authority is the Securities Commission. It is this structure that is responsible for the implementation of national legislation in the field of electronic money circulation. The commission issues an established document package allowing you to open and use a crypto exchange. In addition, this body is responsible for monitoring market participants.