Hong Kong's Virtual Assets Ordinance 2025: What Cryptocurrency Users Need to Know
David Wallace 13 November 2025 13

Hong Kong Crypto Compliance Checker

This tool checks if your cryptocurrency activities comply with Hong Kong's Virtual Assets Ordinance 2025 effective August 1, 2025.

Important: This is not legal advice. Regulations may change. Consult a qualified professional.

When you hear "Virtual Assets Ordinance 2025," it sounds like one big law. But in Hong Kong, it’s not a single rule-it’s a whole system. And if you trade, hold, or issue cryptocurrency, this system changes everything. Starting August 1, 2025, the city rolled out the Stablecoins Ordinance, the first major piece of this new framework. It’s not about banning crypto. It’s about controlling it. And that control has real consequences for how you interact with digital assets.

What Exactly Is Covered?

The Stablecoins Ordinance targets one thing: fiat-referenced stablecoins. These are tokens like USDT or USDC that claim to be worth $1 each because they’re backed by real money. The law says if you issue one of these in Hong Kong-or even if you just target Hong Kong users-you need a license. It doesn’t cover everything. NFTs? Not yet. Security tokens? Regulated under existing securities laws. Central bank digital currencies? Excluded. Even tokens used only within a game or loyalty program are out of scope.

This isn’t random. It’s focused. Regulators saw stablecoins as the biggest risk-used for payments, transfers, and even as a substitute for cash. If one collapses, it could shake the whole system. So they started here. The definition is tight: a digital asset that’s (1) stored on a blockchain, (2) traded electronically, (3) meant to hold steady value, and (4) backed by real-world assets like USD or HKD. If your token fits that, you’re in.

Who Needs a License?

Two groups are now under the microscope: stablecoin issuers and virtual asset dealers/custodians. Issuers-companies that create and back stablecoins-must apply to the Hong Kong Monetary Authority (HKMA) by the end of 2025. They need to prove they hold enough reserves, keep them in safe banks, and submit monthly audits. No more "we’re 95% backed" claims. It’s 100% or nothing.

Dealers and custodians-exchanges, wallets, and trading platforms-must get licensed too. But their rules are stricter. You need at least HK$129,730 in capital. That’s not a lot for a bank, but for a small crypto startup? It’s a wall. You also need at least one person on your team with three years of experience managing crypto portfolios. And you can’t just let users deposit and withdraw freely. Every wallet address must go through a dual-approval process. One person requests it. Another must confirm it. That’s not just security-it’s a bottleneck. Firms report transaction times jumped 30-40% because of this.

It’s Not Just Local-It’s Extraterritorial

Here’s what trips up a lot of foreign platforms: Hong Kong doesn’t care where you’re based. If you’re marketing to Hong Kong users-running ads in Chinese, offering HKD deposits, or having a local customer support team-you’re under their rules. That’s why companies like Binance and OKX had to pull back their retail services in 2023. Now, even if you’re based in Singapore or the U.S., if you want Hong Kong users, you need a license. There’s no loophole. The SFC (Securities and Futures Commission) watches this closely. Violations? Up to HK$5 million in fines and seven years in jail. That’s not a warning. That’s a deterrent.

Retail investor blocked from unlicensed exchange while professional passes dual-approval check.

What You Can’t Do Anymore

If you’re a retail investor, your freedom has shrunk. You can’t just connect your MetaMask to any exchange anymore. All trading must happen through SFC-licensed platforms-and those platforms can’t just let anyone in. They must first assess your knowledge of crypto. No more "just sign up and trade". You’ll be asked questions like: "What’s a private key?" "Do you understand slippage?" "Have you ever lost crypto due to a scam?" If you can’t answer, you get blocked. This isn’t about being nice. It’s about protecting people who don’t know what they’re doing.

And you can’t store crypto on unregulated wallets anymore if you’re using a licensed platform. All custody must go through approved providers. That means no more keeping your coins on a personal hot wallet connected to a Hong Kong exchange. You have to use their custodial solution-or you’re out.

How Are Firms Adapting?

Big players are investing heavily. Chainalysis, a blockchain analytics firm, is now used by 68% of compliant firms to track suspicious transactions. Eighty-two percent of custodians use multi-signature wallets-where three out of five keys are needed to move funds. That’s not just security. It’s compliance.

Some firms are hiring former regulators. Others are partnering with banks to meet the capital requirements. One Hong Kong-based crypto firm spent six months just writing internal policies. They hired a compliance officer with a background in anti-money laundering (AML) law. Their CEO told me: "We didn’t build a crypto business. We built a financial institution that happens to use blockchain."

But not everyone can keep up. Twelve firms have delayed entering the Hong Kong market because they couldn’t meet the cybersecurity standards. Small exchanges are shutting down. One founder told the Hong Kong Fintech Association: "We were doing $200k a month in volume. Now we’d need to spend $80k just to get licensed. It’s not worth it." Regulators atop blockchain tower scanning transactions as small crypto firms collapse below.

What’s Next?

The next phase comes in 2026. That’s when the full VA dealing and custody licensing regimes kick in. But even before that, the SFC will release detailed rules on stablecoin reserves by December 15, 2025. Will they allow only U.S. Treasuries? Or can you use corporate bonds? That’s still unclear. And by Q2 2026, the HKMA will launch a sandbox for cross-border stablecoin payments-testing transactions between HSBC, Standard Chartered, and Bank of China (Hong Kong).

By 2027, NFTs might get regulated. The government has said they’ll review them after the current system settles. But right now, NFTs are still in a gray zone-unless they’re used as investment contracts. Then they’re securities. And that’s already illegal without a license.

Is This Good or Bad?

It’s both. For institutions, it’s a goldmine. Hong Kong now has 42 SFC-licensed asset managers running crypto funds-up from 27 in late 2024. Tokenized real-world assets like bonds and real estate are launching fast. $2.3 billion in RWAs are already in play. Big banks are lining up. Morgan Stanley predicts Hong Kong could control 25-30% of Asia’s institutional crypto custody by 2027.

For retail users? It’s a cage. You can’t trade freely. You can’t use your own wallet. You’re treated like a potential victim, not a participant. And that’s intentional. Hong Kong isn’t trying to be the Wild West. It’s trying to be Switzerland-with Singapore’s efficiency and Wall Street’s oversight. It’s working for big money. But for the average person? It’s getting harder to play.

What Should You Do?

If you’re a retail user in Hong Kong: stop using unlicensed platforms. Check if your exchange is on the SFC’s public list. If it’s not, your funds aren’t protected. If you want to trade, be ready to prove you know what you’re doing. Don’t expect to sign up in five minutes.

If you’re a business: start now. The licensing window is open. Get your AML policies in place. Hire your experienced officer. Set up multi-sig wallets. Use Chainalysis or similar tools. The SFC isn’t waiting. They’re processing applications-but only if you’re ready. And if you’re not? You’ll be left behind while the big players take over.

The Virtual Assets Ordinance 2025 isn’t the end of crypto in Hong Kong. It’s the beginning of its adulthood. No more free-for-all. No more anonymous wallets. No more unregulated exchanges. If you want to be part of this future, you need to play by the new rules. There’s no going back.