Hong Kong has introduced stricter reporting rules for licensed cryptocurrency firms, requiring audits of balance sheets, proof-of-reserves, and internal compliance. The Securities and Futures Commission (SFC) and the Accounting and Financial Reporting Council (AFRC) signed a memorandum of understanding on September 28 to bring virtual asset service providers under the traditional financial reporting framework. Regulators believe this move will improve “market integrity” and bolster confidence among global investors. The new rules also establish a framework for information sharing and coordinated inspections. The SFC CEO stated that supervision must evolve with market dynamics as digital assets become more entrenched in Hong Kong’s financial system.
Hong Kong-licensed crypto firms will face stricter reporting rules, a move regulators believe will improve “market integrity” and confidence. The SFC and AFRC signed an agreement on September 28 to bring crypto firms under the traditional reporting framework.
Under this arrangement, SFC-licensed virtual asset service providers will be strictly audited. These audits will cover corporate balance sheets, proof-of-reserves, and internal compliance reporting.
The framework also provides an avenue for regulatory inspections and investigations for compliance. It “establishes a comprehensive framework for information sharing, case referrals, mutual assistance, and coordinated inspections and investigations in matters of mutual regulatory interest.”
Overall, this will optimize market oversight. Ms. Julia Leung, SFC CEO, echoed a similar stance, citing the need to evolve with market dynamics.
“This MoU ensures our supervision evolves with market dynamics. Deepening our regulatory cooperation across financial sub-sectors is essential to upholding the quality of financial reporting and bolstering the confidence of global investors in Hong Kong’s regulatory system,” she stated.
Digital assets have increasingly become entrenched in Hong Kong’s mainstream financial system. Its stablecoin licensing framework kicked off earlier this year.
Global players such as Standard Chartered have offered support to regulated Hong Kong dollar-denominated stablecoins for payments. Hong Kong has also been a top pioneer of tokenized bonds.
Since 2023, it has offered nearly $4 billion in public sector and tokenized digital bonds. This experience in tokenized bonds led Pakistan to reach out to Hong Kong for technical and regulatory expertise.
Across the APAC region, Hong Kong is among the top countries in terms of crypto adoption as of 2025. However, the massive adoption has also come with stricter rules.
Authorities argue that these rules help curb anti-money laundering and tax evasion. In March, Hong Kong expanded police powers to access encrypted devices, raising privacy concerns for crypto users.
