On 30 Sep 2025, the HKMA and SFC issued a Supplemental Joint Circular amending regulatory requirements for intermediaries in virtual asset activities, mandating stricter client eligibility for dealing and staking services, segregated custody of client virtual assets in VA Segregated Accounts, enhanced risk disclosures for retail clients, and immediate reporting of material non-compliance to regulators.
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Introduction
On 30 Sep 2025, the Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) issued a Supplemental Joint Circular amending regulatory requirements for intermediaries engaged in virtual asset-related activities, focusing on licensing conditions, custody obligations, and client protection measures under existing frameworks.
Licensing Conditions for Virtual Asset Dealing Services
The circular amends licensing conditions for intermediaries providing virtual asset dealing services under an omnibus account arrangement. Licensed corporations or registered institutions must only serve clients who are existing Type 1 regulated activity clients (dealing in securities), with retail clients restricted to SFC-licensed platforms not limited to professional investors. Introducing agents for SFC-licensed platforms must not hold client assets or communicate offers to the platform, and must provide written client agreements clarifying their non-dealing role.
Custody and Asset Handling Requirements
Intermediaries must hold client virtual assets in segregated VA Segregated Accounts established with SFC-licensed platforms or authorized financial institutions meeting HKMA custody standards. Client virtual assets may not be deposited, transferred, or encumbered except for transaction settlements or fees. Client money must be held in segregated bank accounts, with strict prohibitions on payments to officers/employees unless they are the client. Enhanced disclosures are required regarding custody risks, including lack of protection equivalent to client securities under SFO and compensation mechanisms for hacking losses.
Staking Services and Client Protections
New requirements for virtual asset staking services mandate that intermediaries only engage with SFC-licensed platforms or authorized financial institutions as Staking Service Providers. Services must comply with client standing authorities, and intermediaries must disclose all staking risks (e.g., slashing, lock-up periods, hacking) and compensation arrangements. Prior to providing staking services to retail clients, intermediaries must obtain client acknowledgments confirming understanding of these risks.
Disclosure and Reporting Obligations
Intermediaries must provide enhanced disclosures to retail clients about virtual asset risks, including legal uncertainty, lack of Investor Compensation Fund coverage, irreversibility of transactions, and volatility. For contract notes and statements of account, detailed information on virtual asset transactions, holdings, and market values must be included. Intermediaries must report material non-compliance to the SFC/HKMA immediately and provide requested information on virtual asset activities on a periodic basis.
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