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GDF & W3H Submission to Hong Kong FSTB & SFC Public Consultation on the Legislative Proposal to Regulate Dealing in Virtual Assets

Global Digital Finance (GDF) & Web3 Harbour (W3H), (together, the “associations”) welcome the opportunity to respond to the formal Consultation on the regulation of virtual asset (VA) dealing services. We strongly support the Hong Kong Government, the Financial Services and the Treasury Bureau (FSTB) and the Securities & Futures Commission’s (SFC) continued leadership in developing a clear, risk-sensitive framework for digital assets, underpinned by the principle of “same activity, same risk, same regulation.”

We recommend the following refinements to ensure the framework remains
proportionate, competitive and internationally interoperable:

  • Retail and professional investors: Differentiate obligations to reflect risk profiles.
    Retail access should be safeguarded by transparent, criteria-based expansion of token
    eligibility, while professional and institutional clients should be permitted broader
    access under appropriate safeguards.
  • Supervisory equivalence: Incorporate explicit recognition of comparable overseas
    licences and supervisory regimes for dealers and custodians. This will mitigate
    concentration risk, reduce duplication and reinforce Hong Kong’s global connectivity.
  • Stablecoin offerors: Amend the Stablecoin Ordinance in parallel so that licensed VA
    Dealers can be recognised as “permitted offerors” of HKMA-regulated stablecoins.
    Without this amendment, a period of misalignment would exclude VA Dealers from
    stablecoin intermediation despite meeting equivalent prudential standards.
  • Transitional arrangements: Introduce a proportionate transition period allowing
    firms to operate while licence applications are under review, preserving market
    continuity and reducing processing bottlenecks.
  • Capital, custody and fee requirements: Adopt tiered, risk-sensitive requirements
    aligned with FATF guidance and international comparators and ensure operational
    coherence between the custody and dealing regimes.
  • Marketing and cross-border access: Provide clarity on “active marketing,”
    including explicitly preserving the reverse-solicitation carve-out for professional
    investors and enable recognition of credible foreign licences to support cross-border
    market integration.
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