Financial Regulation & SFC Licensing

Overview

Hong Kong’s Securities and Futures Commission (SFC) licenses firms conducting regulated activities under the Securities and Futures Ordinance (SFO). For virtual asset service providers, additional licensing requirements apply under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).

Beyond the existing VATP regime, dedicated VA Dealing and VA Custodian licences are in place to govern crypto OTC and custodian services. These will operate alongside VA advisory and VA management licences.

Our Services

1. SFC & Virtual Asset Licensing

Licence Type	Description
Type 1	Dealing in Securities
Type 4	Advising on Securities
Type 6	Advising on Corporate Finance
Type 9	Asset Management
VATP Licence	Virtual Asset Trading Platform under AMLO
VA Dealing Licence	OTC trading, brokerage, block trading, and VA conversions
VA Custodian Licence	Safekeeping private keys and client VAs

We assist with:

• Licence type scoping and capital requirements
• Application preparation (Internal Controls Manual, compliance framework, AML/CFT programme, business plan)
• Responsible Officer (RO) identification and preparation
• Pre-application engagement with the SFC

2. VA Dealing Licence

Any person carrying on business providing VA dealing services in Hong Kong must obtain an AMLO licence. Scope includes:

• VA-to-VA and VA-to-fiat conversions
• Brokerage and block trading
• Margin trading and OTC services

Key requirements:

• Minimum paid-up capital: HK$5 million (benchmarked to Type 1)
• Client VAs must be custodied with SFC-licensed VA custodians
• Fit and proper requirements for applicants and substantial shareholders

No transitional “deemed licence” —existing providers should engage the SFC early through the pre-application process.

3. VA Custodian Licence

Entities that safekeep private keys or instruments enabling transfer of client VAs must obtain a licence. This includes:

• Associated entities of SFC-licensed VATPs
• SFC-licensed corporations providing VA custody
• Banks and subsidiaries providing VA custody
• Licensed fund managers that self-custody VAs

Individual licensing applies to personnel with direct access to private keys or authority to initiate VA transfers.

Key requirements:

• Minimum paid-up capital: HK$10 million
• Strict segregation of client assets
• Strong internal controls over key management
• Enhanced cybersecurity and business continuity planning

Exemptions:

• Group companies custodising only for their group
• Legal/accounting professionals holding backup keys for clients
• HKMA-licensed stablecoin issuers custodising only their own stablecoins
• Licensed fund managers self-custodying newly issued tokens up to a limited threshold (under consideration)

4. Compliance Programmes & Ongoing Obligations

• AML/CTF frameworks aligned with HKMA and SFC standards
• Internal control procedures and compliance structures
• Manager-in-Charge (MIC) designations for all eight core functions
• Financial resources maintenance (paid-up capital and liquid capital)
• Post-licence compliance calendar, annual returns, and SFC notifications

5. Regulatory Investigations & Enforcement

• Internal and external regulatory investigations
• SFC enforcement matters (IPO sponsor conduct, licensing breaches, AML failures, cybersecurity)
• Market misconduct tribunal proceedings
• Licensing condition reviews and appeals
• Cross-border regulatory matters

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Why Choose ALLO?

Tri-Qualified – Qualified lawyer in Hong Kong, England and Wales, and New York.

Front-Line Industry Experience – Assisted crypto and fintech industry leaders in obtaining the necessary licenses and regulatory approvals.

Practical, Results-Driven – We cut through regulatory complexity to deliver actionable solutions.

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Who We Help

Client Type	How We Help
Cryptocurrency exchanges	VATP licensing under AMLO
VA dealers	VA Dealing Licence for OTC, brokerage, block trading
VA custodians	VA Custodian Licence for private key safekeeping
Asset managers	Type 9 licensing and ongoing compliance
Fintech startups	Regulatory sandbox and licensing strategy
Financial institutions	SFC licensing, acquisitions, and investigations
Listed companies & ROs	SFC enquiries and enforcement actions

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Selected Experience

• Advised financial institutions on SFC licensing applications and acquisitions (Types 1, 4, 6, and 9), including virtual asset uplifts
• Represented SFC licensed corporations, ROs, and listed companies in SFC investigations
• Advised payment platforms on MSO licensing and compliance
• Obtained SFC licences for fintech companies and cryptocurrency platforms

Frequently Asked Questions (FAQs)