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Hong Kong industry group criticized proposed crypto licensing changes
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New rules could remove the 10% crypto allocation threshold
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Even small crypto exposure may require full licensing
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Group warns rules could deter traditional asset managers
A Hong Kong securities industry group has warned that proposed changes to the city’s crypto asset management rules could discourage traditional firms from entering the digital asset space.
The Hong Kong Securities and Futures Professionals Association objected to plans that would remove the existing 10% de minimis threshold for Type 9 licensed asset managers. Under current rules, firms can allocate less than 10% of a fund to crypto without applying for a separate virtual asset management license.
If the proposed changes are adopted, even a small allocation, such as 1% exposure to bitcoin, would require full licensing. The group called this approach disproportionate, arguing that it imposes heavy compliance costs despite limited risk.
The association also criticized proposed custody rules that would require all digital assets to be held with locally licensed custodians. It warned this could make it impractical for venture capital and private equity funds to invest in early-stage Web3 projects that rely on offshore or self-custody solutions.
The pushback comes as Hong Kong continues positioning itself as a global crypto hub, rolling out licensing regimes for exchanges and stablecoin issuers. Industry groups support regulation but argue that overly strict rules could slow adoption and push innovation elsewhere.
