Hong Kong Plans to License Crypto Brokers, Custodians and Advisers as US Rules Stay Stuck in Congress
Hong Kong's government is preparing a law that would require a license for any business that trades, holds, advises on, or manages cryptocurrency on behalf of clients. The Financial Services and the Treasury Bureau announced the plan on May 26, 2026, and officials have said they aim to bring the legislation before the Legislative Council before the end of 2026.
The move would expand Hong Kong's existing licensing system, which currently covers crypto exchanges, to include four additional categories of business: dealers who trade crypto for clients, custodians who hold digital assets securely, advisers who give recommendations on which cryptocurrencies to buy, and managers who run crypto investment funds. The government closed its public consultation on the proposal in May 2026, after first introducing the idea in December 2025.
Meanwhile, in the United States, the path to regulation looks different. In early October 2026, the Securities and Exchange Commission proposed allowing investment advisers to hold Bitcoin and other cryptocurrencies for their clients. But the broader legislative effort in Congress, the CLARITY Act, failed to advance in the Senate on September 15, 2026, leaving the country without a comprehensive federal framework for digital assets.
What Hong Kong's Licensing Plan Requires
Under the proposed system, firms seeking a dealer license would need at least HK$5 million in paid-up capital, or roughly $640,000. Custodians would face a higher bar, needing at least HK$10 million, or about $1.3 million, according to a summary from law firm Davis Polk. Banks already regulated by the Hong Kong Monetary Authority would not have to meet these specific capital requirements.
The addition of adviser and fund manager licenses marks a notable shift. These categories would apply standards similar to those used for traditional stock market advisers and fund managers to individuals and firms working in crypto, covering anyone who guides clients on crypto investments or operates crypto funds.
Julia Leung, chief executive of Hong Kong's Securities and Futures Commission, said in May 2026 that the level of market support for the proposal "demonstrates the strong need for robust and comprehensive regulation."
Why the Legal Structure Matters
One difference between the two approaches lies in durability. Once Hong Kong's Legislative Council passes a law, it can only be undone by another act of the legislature. In the United States, regulatory agencies like the SEC and CFTC can revise or withdraw their own rules in future sessions, meaning a policy proposed today could be altered or reversed later without new legislation.
That said, the US retains an advantage that licensing structure alone does not offset: the sheer size of its capital markets. US spot Bitcoin ETFs currently manage tens of billions of dollars in client assets, a scale Hong Kong's market has not matched.
Both jurisdictions are still finishing their rules. Hong Kong has published the results of its consultation process, but the actual bill text has not been released publicly, and it has not yet been submitted to the Legislative Council. The SEC's proposal, for its part, does not have a confirmed adoption date.
Who this affects
This development is most relevant to crypto exchanges, brokers, custodians, financial advisers and fund managers operating in or planning to enter the Hong Kong market, as they would need to meet new licensing and capital requirements if the law passes as proposed. It also matters to investors and account holders who use licensed crypto services, since licensing rules are designed to set standards for how client assets are handled. In the US, the SEC's proposal would primarily affect investment advisers who want to custody digital assets for clients, while the broader regulatory outlook for US crypto markets remains unsettled pending further Congressional action.
Whether Hong Kong actually submits its bill to the Legislative Council by the end of 2026, and whether it keeps the adviser and manager licenses intact, will determine how much ground it gains on the US. If the bill is delayed or narrowed, the US may keep pace through its own evolving agency rules. If it passes as currently outlined, Hong Kong could have a more settled legal framework for crypto services than the US has at this point.
As with any financial or regulatory news, the details that matter most depend on individual circumstances. A personal finance writer who focuses on explaining money, insurance and benefits news in plain language would note that readers with questions about how crypto rules, licensing changes or cross-border investment options might apply to them should speak with a licensed financial professional familiar with their specific situation.
Hong Kong’s proposed framework aims to bring digital asset firms under clear oversight, reflecting how regulators worldwide are still working to keep pace with rapid innovation in blockchain technology.
Source: 24/7 Wall St.
See also our earlier piece: Treasury Withdraws Two Crypto Wallet Tracking Rules, But Tax Reporting Keeps Expanding
