Hong Kong Industry Group Warns Crypto Licensing “Hard Start” Could Disrupt Market

The Hong Kong Securities & Futures Professionals Association (HKSFPA) raised concerns as regulators continue consulting on expanded licensing regimes that would cover virtual asset dealing, advisory and management services — going beyond the existing framework for crypto trading platforms.

 Under the proposed framework, existing businesses would be required to secure full regulatory licenses by the time the new rules take effect. However, the association warned that without transitional arrangements, firms still completing applications might be forced to suspend regulated operations while waiting for approval — potentially creating a bottleneck and undermining continuity.

In its consultation feedback, the HKSFPA urged regulators to introduce a 6–12 month “deeming” or grace period for operators who submit applications before the regime’s commencement date. The group argued that such a transitional window would allow existing compliant firms to operate without disruption, even as authorities process their licensing paperwork.

While supporting Hong Kong’s broader goal of strengthening oversight and integrating digital assets into the mainstream financial system, the association stressed that overly rigid timelines could deter participation and hinder adoption, especially among institutional market participants.

The expanded licensing consultation is part of Hong Kong’s broader effort to position itself as a regulated crypto hub in Asia, following the gradual rollout of virtual asset regulatory frameworks and the SFC’s licensing of digital asset trading platforms.

As the consultation continues without a fixed implementation date, the industry’s call for balanced transitional policies highlights the ongoing tension between fostering innovation and managing regulatory risk.