HONG KONG SAR, CHINA Law and Practice Contributed by: Pang Lee, Joyce Wang, Mark Liang and Francis Li, Cooley
The core requirement is the “fit and proper” test, wherein the SFC or the HKMA evaluates the financial status, educational qualifications, industry experience and character of the applicant corporation, its ultimate beneficial owners and its executive management. Applicants must possess significant corporate sub- stance. They must be either a Hong Kong-incorpo- rated company or a registered non-Hong Kong com- pany under the Companies Ordinance, maintaining a permanent physical place of business locally. Local personnel requirements mandate the appointment of at least two responsible officers, who must be physi- cally available in Hong Kong to directly supervise the regulated activities. Prudential requirements are exceptionally strict. Licensed VATPs and VA managers must maintain substantial paid-up share capital (eg, HKD5 million for advisory and management, HKD10 million for cus- todians) and maintain continuous liquid capital buffers ranging from HKD100,000 to HKD3 million depend- ing on whether they hold client assets. Furthermore, applicants must submit exhaustive independent assessment reports covering their smart contract architecture, cybersecurity infrastructure, AML/CFT transaction monitoring systems and custody wallet management protocols before approval is granted. 3.3 Change of Control Hong Kong enforces stringent change-of-control requirements to prevent bad actors from bypassing the rigorous licensing gateway through corporate acquisitions. Under Section 132 of the SFO (and the parallel AMLO provisions), for any licensed VATP or regulated VA service provider, the SFC must be noti- fied in writing and grant prior approval before any person becomes a “substantial shareholder” (typically defined as holding 10% or more of the voting rights or issued shares) or an ultimate owner of the entity. The acquiring entities, new corporate controllers and any newly appointed directors are subjected to the exact same exhaustive ft and proper assessments as the original licence applicants. The SFC also requires detailed notifications within seven business days regarding significant changes in the capital structure, ultimate beneficial ownership, scope of business
activities or material alterations to the firm’s internal controls and business plans. If corporate authority is found to be lacking or circumvented during material changes, courts have demonstrated a willingness to nullify agreements entirely, as seen in the recent LT v RV [2026] HKCFI 1280 decision, where a crypto- arbitration settlement agreement was declared void because the signatory director lacked the authority required by a court-approved scheme of arrangement. 3.4 Passporting Hong Kong does not participate in any regulatory passporting regimes for financial, securities or digital asset licences. The framework is strictly localised. A licence obtained from the SFC or the HKMA cannot be passported into other jurisdictions, and foreign enti- ties holding equivalent licences from sophisticated overseas regulators (such as the UK Financial Con- duct Authority or the Monetary Authority of Singapore) cannot passport those permissions into Hong Kong. They must establish local corporate substance, meet all capital thresholds and undergo the full, independ- ent domestic application process to service the Hong Kong market. Selling blockchain and crypto-asset services cross- border into Hong Kong is subject to severe restric- tions. Under both the SFO and the AMLO, it is a crimi- nal offence for unlicensed offshore entities to “actively market” regulated digital asset services or unauthor- ised investment products to the Hong Kong public. The SFC’s FAQ on this defines the term broadly, encompassing internet activities targeting Hong Kong investors, mass media campaigns and frequently call- ing on Hong Kong residents. 4. Cross-Border Services 4.1 Marketing Permitted marketing by licensed entities is governed by strict advertising standards. Communications must be fair, not misleading and must prominently feature comprehensive risk disclosure statements explaining the volatility, liquidity constraints and cybersecurity risks inherent to the digital assets being offered. Com- plex products, including overseas non-derivative VA exchange-traded funds, face strict selling restrictions
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