Hong Kong to Centralize Regulation of Virtual Asset OTC Services

According to Odaily, Hong Kong's Financial Services and the Treasury Bureau previously proposed that the Customs Department issue licenses and regulate virtual asset over-the-counter (OTC) services. Financial Secretary Christopher Hui explained that after suggesting Customs oversight, legislative council members expressed concerns about regulatory arbitrage. It was later discovered that the market's operational model was more complex than initially anticipated, with some OTC institutions also providing custodial services. As a result, the Securities and Futures Commission (SFC) has been designated as the primary regulator for these transactions. If services involve banking elements, the Hong Kong Monetary Authority will act as the frontline regulator. Hui further stated that regardless of whether virtual asset service providers are eventually considered licensed, there will be adequate expectations set to ensure sufficient regulatory and other resources are available to handle license applications.