What License Do You Need to Operate a Cryptocurrency Exchange in Hong Kong?

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Operating a cryptocurrency exchange in Hong Kong has become a strategic priority for many Web3 businesses aiming to establish a compliant presence in Asia. With the Hong Kong Securities and Futures Commission (SFC) actively regulating the virtual asset sector, understanding the licensing landscape is crucial for any platform looking to serve investors in the region.

As of October 3, 2024, the SFC updated its official list of licensed virtual asset trading platforms, officially recognizing HKVAX as the third fully licensed exchange—joining OSL Exchange and HashKey Exchange. According to reports from Ming Pao, HKVAX holds both Type 1 (Securities Dealing) and Type 7 (Automated Trading Services) licenses, enabling it to offer OTC brokerage, crypto trading, and comprehensive virtual asset custody services.

But here’s the big question:
👉 Discover how to legally launch your crypto exchange in Hong Kong and avoid costly regulatory missteps.

This raises a critical point for entrepreneurs: Is it enough to apply for a Virtual Asset Trading Platform (VATP) license, or must you also secure traditional financial licenses like Type 1 and Type 7? And what about platforms that appear "licensed" but aren’t holding formal SFC permits?

Let’s break down the current regulatory framework and clarify what it truly takes to operate legally in Hong Kong’s evolving digital asset market.

Current Licensing Status of Hong Kong’s Crypto Exchanges

The SFC maintains a public list of approved and pending virtual asset trading platforms. As analyzed by legal experts at ManQin Law Firm, here's an overview of the current status:

Note: Platforms labeled as “deemed licensed” are operating under temporary permissions. They can only serve professional investors, not retail users. These platforms are restricted from offering leveraged trading, derivatives (e.g., futures), lending, market-making, or other high-risk financial activities.

A clear pattern emerges: while most platforms rely on temporary VATP status, the only three fully recognized exchanges—OSL, HashKey, and HKVAX—all hold both Type 1 and Type 7 licenses in addition to their VATP authorization.

So, what’s the relationship between these traditional financial licenses and the newer virtual asset framework?

Understanding VATP License vs. SFC Financial Licenses

In Hong Kong, any centralized platform offering crypto trading services to the public—or actively marketing to Hong Kong residents—must comply with two key regulations:

1. Securities and Futures Ordinance (SFO)

Regulates platforms dealing in security tokens—digital assets classified as securities. This requires:

These licenses are essential if your platform facilitates trades in assets that may be deemed securities under Hong Kong law.

2. Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO)

Covers platforms facilitating trades in non-security virtual assets, such as Bitcoin or Ethereum. This falls under the Virtual Asset Trading Platform (VATP) licensing regime.

However, because a digital asset can shift classification—from utility token to security, or vice versa—the SFC strongly advises platforms to apply for both SFO and AMLO compliance. This dual approach ensures regulatory continuity and avoids accidental violations.

👉 Learn how top exchanges navigate dual licensing to unlock full market access in Hong Kong.

Key Financial Licenses for Crypto Businesses in Hong Kong

Under the SFO, financial activities are categorized into 10 types of regulated activities. For crypto-focused firms, the most relevant include:

Other licenses like Type 2 (futures), Type 5 (futures advice), or Type 6 (corporate finance) may apply depending on business scope—but are not typically required for standard exchange operations.

Matching Business Models with Required Licenses

You don’t need all licenses—only those aligned with your services.

If You’re Running a Pure Crypto Exchange:

Focus on:

Most major exchanges like OSL and HashKey follow this model.

If You Offer Investment Advice:

Whether you're a Telegram group admin giving crypto tips or a formal advisory firm, you’ll need a Type 4 License to legally provide recommendations.

If You Manage Crypto Investment Funds:

A Type 9 License allows you to manage client portfolios including Bitcoin, Ethereum, and other digital assets. Notably:

Holders of a Type 9 license can conduct securities dealing and give investment advice without needing separate Type 1 or Type 4 licenses—making it a powerful option for integrated Web3 asset managers.

For companies aiming to build an ecosystem like HashKey Group—combining exchange, advisory, and fund management—the optimal path is securing:

Frequently Asked Questions (FAQ)

Q: Can I operate a crypto exchange in Hong Kong with just a VATP license?
A: Technically yes under temporary "deemed licensed" status—but only for professional investors and with significant service restrictions. Full market access requires additional SFC licenses like Type 1 and Type 7.

Q: What’s the difference between a license and being “deemed licensed”?
A: A full license means full regulatory approval. “Deemed licensed” is a transitional status allowing limited operation while awaiting final approval.

Q: Do I need a license to run a crypto wallet or custody service?
A: Yes. If you’re providing custodial services as part of trading or fund management, you must meet strict cybersecurity and audit requirements under both AMLO and SFO frameworks.

Q: Can retail investors use deemed-licensed platforms?
A: No. Only professional investors (e.g., institutions or high-net-worth individuals meeting specific criteria) can access these platforms during the transitional period.

Q: How long does it take to get a full VATP license?
A: The process typically takes 6–12 months, depending on application completeness, compliance readiness, and SFC review timelines.

Q: Is there a way to start small and scale up compliance?
A: Yes. Many firms begin by targeting professional investors under deemed status while preparing for full licensing—a phased approach recommended by regulators.

👉 See how compliant exchanges scale from concept to full operation in Hong Kong’s regulated environment.

Final Thoughts: Who Controls the Future of Hong Kong’s Crypto Market?

As of early October 2024, only three platforms—OSL, HashKey, and HKVAX—have achieved full licensing status. Most others operate under restricted temporary authorizations. This creates a first-mover advantage: early adopters of comprehensive compliance gain credibility, investor trust, and broader service capabilities.

For startups and fintech innovators, the message is clear:
To serve retail users, offer derivatives, or expand into asset management, you must go beyond basic registration. A robust licensing strategy combining VATP authorization, Type 1, Type 7, and potentially Type 9 licenses is the gold standard.

The Hong Kong crypto market is no longer the Wild West—it’s becoming a model of regulated innovation. And those who embrace compliance today will shape the industry tomorrow.

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