Company Registration
1 Week
Local Director?
No
Bank Account Opening
4 Weeks
Travel Required?
No
Excellent
Based on 87 reviews
Hong Kong cryptocurrency license
- Hong Kong crypto license opens entry to one of the worlds’ strongest and most crypto-friendly markets. Hong Kong, having developed an advanced legal framework with supporting infrastructure is among the top destinations for cryptocurrency transactions and blockchain innovation. The economic environment as well as progressive regulations have catalyzed rapid growth in the crypto space. Countries such as the U.S. and Switzerland have lagged in the 2022 World Cryptocurrency Readiness Report. Hong Kong remains the most “crypto-ready” in the world and ranks highly because of an abundance of blockchain startups and high access to cryptocurrencies per capita.
- Since 2018, the Hong Kong government has been very supportive of blockchain technology, providing funds to blockchain projects through the Innovation and Technology Fund (ITF) and issuing regulations through the Securities and Futures Commission (SFC) on various matters, such as the security token offering and the trading of virtual assets, to ensure compliance. The Hong Kong Blockchain Society and the Hong Kong Monetary Authority (HKMA) also played a key role and have been working on the e-HKD pilot, launched in 2023, studying digital currency applications in various sectors.
- For crypto businesses and entrepreneurs focusing on Asia, it is required to register company in Hong Kong for a cryptocurrency license serves as an attractive route. Tetra Consultants can aid a business in navigating its licensing process to establish itself within this dynamic, well-governed financial hub.
Advantages of Hong Kong crypto license
Credibility and trust
- Acquiring a crypto license in Hong Kong is a considerable boost for the business credibility, allowing the business to gain clients’ and investors’ trust. This helps particularly with attracting institutional investors who tend to prefer the regulated entity.
Robust regulatory framework
- Hong Kong possesses a clear and well-established regulatory structure governing cryptocurrency. Clear regulation allows for the safety of businesses to carry out activities within the borders of legality, thus posing minimal risks for compliance issues.
Business-friendly environment
- Low corporation taxes and no capital gain tax on cryptocurrencies make it the most business-friendly region, ideal for crypto startup location and expansion with smooth governance.
Access to capital
- It is a global finance center where different investors as well as venture capitalists meet. A Hong Kong crypto exchange license opens various doors to massive funding business opportunities for expansion.
Ecosystem support
- Hong Kong’s dynamic crypto ecosystem is filled with a number of startups, industry events, and networking opportunities. There are also specialized associations and incubators that encourage collaboration and innovation in the sector.
International market access
- Hong Kong’s infrastructure and relationships act as a gateway to Asia and global markets and help businesses with a crypto license expand beyond local borders.
Global recognition
- Hong Kong has rules that are consistent with those of the world, allowing companies to be accessed by the global economy and enables them to expand into other jurisdictions with minimal legal barriers.
Potential tax incentives
- Recent discussions indicate the proposal of introducing tax incentives on crypto investments which makes the jurisdiction more attractive for crypto businesses.
Reputation in the crypto community
- Obtaining a Hong Kong crypto exchange license would give a company prestige in the global crypto community, making it more attractive to partners and clients from around the world.
What are the types of Hong Kong crypto license?
In Hong Kong, businesses engaged in cryptocurrency activities must obtain specific licenses to operate legally. The regulatory framework is primarily overseen by the Securities and Futures Commission (SFC). Here are the main types of crypto licenses available:
Virtual Assets Trading Platform (VATP) License:
- Launched in June 2023, the VATP license framework directly regulates those trading in virtual assets. In Hong Kong, the regulation of virtual asset trading platforms (VATPs) requires operators to obtain a license under either the Securities and Futures Ordinance (SFO) or the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). This licensing regime was established to enhance oversight and compliance in the rapidly evolving virtual asset sector.
Regime under VATP license includes:
Anti-Money Laundering Ordinance (AMLO) regime:
- The AMLO regime is designed to enforce robust anti-money laundering (AML) and counter-terrorist financing (CTF) measures, requiring strict compliance from entities offering virtual asset services. While the AMLO does not establish a separate AMLO License, it sets specific requirements within the broader Virtual Asset Trading Platform (VATP) licensing framework, targeting platforms that do not engage in activities requiring a Securities and Futures Ordinance (SFO) regime.
- This is especially true for centralized platforms that provide non-security token trading services through automated trading engines that match client orders, by means of custody services as a licensable ancillary service. The obligations also fall to Licensed Providers and their Licensed Representatives including the Responsible Officers performing them. This framework specifically covers exactly those platforms that do not engage in activities which would bring them into a category requiring an SFO license.
Securities and Futures Ordinance (SFO) regime:
- Virtual Asset Trading Platforms (VATPs) must obtain specific licenses under the Securities and Futures Ordinance (SFO) regime to operate. SFO regime includes a Type 1 license covers regulated activities in relation to dealing in securities, meaning trading in virtual assets deemed securities. It also includes a Type 7 license applies to the provision of automated trading services, applicable to platforms that match orders initiated by clients using an automated trading engine. This regime scope is focused on centrally located platforms that provide trading services in security tokens, including custodial services as a secondary function. These regimes are needed for Licensed Corporations and their Licensed Representatives, who include Responsible Officers tasked with supervising compliance and operations.
Regulatory authority and laws governing Hong Kong crypto license
- In Hong Kong, the Securities and Futures Commission (SFC) is the primary regulatory body responsible for overseeing cryptocurrency activities. The SFC licenses virtual asset service providers, which operate under a well-defined legal framework and are subject to the applicable regulations. Showing that Hong Kong is dedicated to having a transparent and secure environment for crypto-related businesses.
Key regulatory framework governing Hong Kong crypto license includes:
Anti-Money Laundering and Counter-Terrorist Financing Act (AML/CTF):
- Amendments to the AML/CTF Act effective from 1 April 2023 mandate that each Virtual Asset Service Provider get a license for cryptocurrencies issued by the SFC. These amendments represent a drastic change in regulation in terms of moving towards increased regulation with improved measures of compliance. The AML/CTF Act introduces a robust framework that obliges the VASPs to have strong anti-money laundering and counter-terrorism financing measures in place, bringing more security and transparency to clients and stakeholders.
Securities and Futures Ordinance:
- Prior to the inception of the dedicated licensing regime for virtual assets, SFO remains the primary oversight regulating entities engaged in the conduct of cryptocurrency-related business activities. Originally intended for governing the traditional financial instrument and its derivatives, updates introduced new provisions that included coverage in some aspects of operations within the cryptocurrency ecosystem. Most of the entities that were previously operating under the SFO framework have since moved to the new licensing structure, allowing the SFC to specifically regulate crypto services in line with global standards.
Activities allowed under Hong Kong crypto license
Activities allowed under a Hong Kong crypto license, particularly through the Virtual Assets Trading Platform (VATP) license, are closely regulated by the Securities and Futures Commission (SFC). The activities allowed are as follows:
Trading activities:
- Regular offers: Licenses allow licensees to regularly offer to buy or sell virtual assets. It results in legally binding transactions. Business enterprises can therefore facilitate virtual asset trades within a regulated framework.
- Client onboarding: Businesses can also onboard clients who may be interested in discussing or executing their virtual asset-related negotiations or transactions, further expanding the possible client-based involvement of a firm in the crypto markets.
Assets management:
- Portfolio management: Licenses granted for firms handling portfolios including virtual assets, and that asset management must be performed in and under the supervision of the requirements of the SFC.
Client asset handling:
- Possession of client assets: VASPs can possess client funds or virtual assets directly or indirectly. In this case, they will be able to service client assets but under the prescribed compliance.
Restrictions on services:
- Licensing for securities-related services: An entity would not offer services that would involve virtual assets which fall under the definition of a security unless the entities obtain the necessary license. Hence, any business entity which engages in securities related activities will not violate SFO.
Timeline to obtain Hong Kong crypto license
- Tetra Consultants helps streamline the process of getting a Hong Kong crypto license within a time frame of 6-8 months. Within 1 week of receiving the due diligence documents, Tetra Consultants will register your Hong Kong company. Then we proceed for setting up your company and complying with the regulatory requirements for your crypto license in Hong Kong. We expect to be done with this setup in 3 weeks.
- Following all these arrangements, Tetra Consultants will file a crypto license application with the Hong Kong Securities and Futures Commission. The processing and approval period of such applications by the SFC normally takes 3 to 5 months. If additional documentation or local director service is required from the government of Hong Kong, Tetra Consultants will comply with all these requirements efficiently through nominee director and shareholder services. After the license is approved, our team will proceed with corporate bank account opening with Hong Kong banks. Generally, this process takes about 4 weeks after the company incorporation.
- Sometimes, the processing of the Hong Kong government or bank requirements might cause some delay. Tetra Consultants is keen on negotiating aggressively with all relevant parties to minimize any disruptions and ensure the engagement proceeds efficiently.
Procedure to obtain Hong Kong crypto license
Step 1: Company incorporation
- Initially, we will register a company preferably limited liability company in Hong Kong within 1 week. This will involve the opening of a physical office and the hiring of local personnel with at least one director who must be a Hong Kong resident and a local company secretary. The company will also need to maintain a minimum share capital of 5,000,000 HKD for regulatory purposes.
- We also offer international trademark registration services to protect your company name and brand identity globally, thus ensuring that your business is protected as it enters the Hong Kong market.
Step 2: Prepare required documentation
- Tetra Consultants will further begin to draft all the necessary paperwork that would be required, using professional legal drafting services, and ensure full compliance with the regulatory demands of Hong Kong. All financial projections for 3 to 5 years should be included in the plan.
- Furthermore, an adequate compliance policy on AML/CTF measures should be developed to ensure comprehensive compliance. We will also have included an organizational chart showing who owns the company and the management level, giving clear outlines based on Hong Kong standards.
Step 3: Appointment of responsible officers and licensed representatives
- Furthermore, our HR would appoint at least two Licensed Representatives and at least one of those is an executive director and an actual full-time resident in Hong Kong. Our HR team also helps in finding and appointing 2 responsible officers (one of which must be a resident) that handle compliance and risk management to ensure that the company is fully compliant and has a sound governance system.
Step 4: Conduct fit and proper test
- Further, once the officers and representatives have been appointed, we will pass all the key staff members through fit and proper tests undertaken by the SFC. Assessments would cover the integrity, competence, financial solvency of every individual and would also confirm the absence of criminal records. Thus, we ensure regulatory standards are adhered to.
Step 5: Submit application
- Once all regulatory standards are met, we will proceed with submitting the application through the SFC’s WINGS portal. This submission will include all required documents, applicable fees, and a detailed outline of the services intended to be offered in the Hong Kong market.
Step 6: Await approval
- Assuming no issues, we should anticipate the application to be cleared within 3 to 5 months.
Step 7: Corporate bank account opening
- Upon approval of the license, Tetra Consultants would facilitate the clients with the corporate bank account opening with reliable Hong Kong banks. It takes about 4 weeks. All documentation to open a bank account will be prepared and submitted to satisfy the requirements of the desired bank by Tetra Consultants. We would work along with banks to smooth out the whole procedure of account opening and then communicate with the relevant bank as needed to finalize further details and queries.
Step 8: Maintain operational standards
- Furthermore, Tetra Consultants will ensure ongoing compliance with all regulatory requirements following the licensing approval. This includes regular reporting to the Securities and Futures Commission (SFC) and strict adherence to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) policies. Additionally, we will establish internal audit functions and implement robust cybersecurity measures to safeguard client assets effectively.
Documents required to obtain Hong Kong crypto license
- Valid copies of IDs of directors and shareholders.
- Certificate of incorporation for the company registered in Hong Kong.
- Memorandum and Articles of Association.
- A detailed business plan outlining the operations, services offered, and market strategy.
- Financial projections for the next 3-5 years.
- Evidence of paid-up share capital (minimum 5,000,000 HKD).
- Documentation proving the existence of a physical office in Hong Kong.
- An organizational chart detailing ownership and management structure.
- Details of at least two licensed representatives (one must be a full-time resident of Hong Kong).
- Information on responsible officers, including their qualifications and experience.
- Internal policies for Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF).
- Risk management policies addressing cybersecurity and operational risks.
- Background checks for all key personnel, including criminal record checks, financial solvency, and professional qualifications.
- Information on the appointed IT manager responsible for technology compliance.
Regulatory requirements to obtain Hong Kong crypto license
- Minimum of 1 Shareholder of any nationality.
- Minimum of 1 local Director.
- Minimum of 1 local Compliance Officer.
- Local physical office.
- Paid up capital minimum of HK$5,000,000.
- At least 2 responsible officers, including 1 Executive Director (can be foreigner) and 1 full-time Hong Kong resident.
Taxation policies for Hong Kong crypto license
Corporate Income Tax:
- The Hong Kong standard corporate income tax rate is pegged at 16.5% on profits, though the two-tiered system enables eligible businesses to benefit from a reduced rate of 8.25% on the first HK$ 2,000,000 of profits.
No capital gains tax:
- No capital gains tax is levied in Hong Kong on profits obtained in buying and selling cryptocurrencies, which has been advantageous for individuals and businesses to freely engage in cryptocurrency trading, without paying taxes on their profits from such trades.
Income tax on trading activities:
- In the case of profits earned from trading in a cryptocurrency that is incurred in the course of business, such profits would be considered income and hence charged with an income tax. The provision applies both to individuals who frequently trade cryptocurrencies and corporate bodies.
What is the cost of acquiring Hong Kong crypto license?
- Acquiring a Hong Kong crypto license comes with a variety of essential components in its cost. These include company structure, compliance requirements, and government fees. Tetra Consultants will give a breakdown of all the costs that may be incurred in obtaining a Hong Kong crypto license, including regulatory compliance costs, government and application fees, and other additional costs of setting up local operations.
- We present detailed charts and expense analysis for the client to understand beforehand the amount of finance that will be spent on each stage of the licensing process. Tetra Consultants handles all details of the process from incorporation of the company, compliance staff hiring, AML and CFT compliance to application with the Securities and Futures Commission of Hong Kong.
- It allows us to guide our clients to the best investment decision regarding their financial needs. Our team is very efficient in the licensing process, making it a cost-effective and hassle-free process for our clients so they can be confident with their financial planning as they enter the Hong Kong crypto market.
Looking to obtain Hong Kong crypto license
Contact us to know more about Hong Kong crypto license and our team will revert back in 24 hours.
Applying for a Hong Kong crypto exchange license with Tetra Consultants provides a step-by-step, transparent way into one of Asia’s leading financial hubs. From initial company incorporation through to compliance support and licensing, our ensuing, our team ensures that at each step in the Hong Kong crypto license application, everything runs smoothly. With our knowledge of the requirements on compliance and the local banking setup, Tetra Consultants can assist you in meeting all applicable standards and run your business with confidence in the thriving Hong Kong crypto market.
FAQ:
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