What Licenses Are Required to Operate a Virtual Asset Exchange in Hong Kong?

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Hong Kong has emerged as a leading hub for virtual asset innovation in Asia, thanks to its clear regulatory framework and forward-thinking financial policies. For businesses aiming to launch or expand a cryptocurrency exchange in the region, understanding the licensing landscape is crucial. This guide breaks down the key licenses required, clarifies the difference between formal牌照 (licensing) and deemed licensing status, and outlines how different business models align with specific regulatory requirements — all while keeping compliance at the forefront.

Overview of Virtual Asset Exchange Licensing in Hong Kong

As of October 3, 2024, the Securities and Futures Commission (SFC) updated its list of licensed virtual asset trading platforms, officially recognizing HKVAX as the third fully licensed crypto exchange in Hong Kong, 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 custody services.

But here's a common question among entrepreneurs: Do you need individual financial licenses like Type 1 and Type 7, or is the Virtual Asset Trading Platform (VATP) license sufficient? The answer lies in understanding how Hong Kong’s dual regulatory framework operates.

👉 Discover how top exchanges achieve compliance and scale securely in Asia’s most dynamic market.

Current Status of Licensed and Deemed-Licensed Platforms

The SFC maintains a public register of platform operators that are either formally licensed or operating under a "deemed licensed" status. Here's a snapshot:

While “deemed licensed” platforms can operate, they face strict limitations:

This highlights a critical trend: the three fully licensed exchanges all hold both Type 1 and Type 7 licenses, suggesting these are foundational for full compliance.

Understanding the Dual Regulatory Framework

Hong Kong regulates virtual asset exchanges through two primary legal instruments:

1. The Securities and Futures Ordinance (SFO)

Under the SFO, platforms dealing in security tokens — digital assets classified as securities — must obtain relevant牌照. Specifically:

These apply when your platform facilitates trading of tokens deemed securities under Hong Kong law.

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

AMLO governs platforms offering trading services for non-security virtual assets, such as Bitcoin and Ethereum. Under this regime:

Given that a digital asset can shift classification — from utility to security token based on use case — the SFC recommends a dual-application strategy:

Apply for both SFO licenses (Type 1 & 7) and AMLO-based VATP permission to ensure regulatory continuity regardless of asset classification changes.

This proactive approach minimizes compliance risk and supports long-term scalability.

Key Financial Licenses for Virtual Asset Businesses

To operate legally in Hong Kong’s financial ecosystem, businesses must align their activities with one or more of the ten regulated activities defined under the SFO. The most relevant for crypto ventures include:

Notably, firms holding a Type 9 license can conduct securities dealing and advisory services without needing separate Type 1 or Type 4 licenses — a strategic advantage for integrated Web3 financial service providers.

👉 Learn how asset managers combine Type 9 licensing with VATP compliance to unlock institutional-grade crypto services.

Matching Business Models to Licensing Needs

You don’t need every license — only those aligned with your actual services.

Scenario 1: Running a Pure Crypto Exchange

If your business focuses solely on matching trades between users:

Scenario 2: Offering Investment Advice or Research

If you publish crypto market analysis or run paid advisory channels:

Scenario 3: Managing Crypto Investment Funds

For fund managers allocating capital into Bitcoin, Ethereum, or tokenized real-world assets:

Scenario 4: Full-Service Web3 Financial Group (Like HashKey)

HashKey Group holds multiple licenses across subsidiaries:

This structure enables end-to-end services: trading, advisory, and fund management — all within compliance boundaries.

👉 See how multi-license strategies power scalable, compliant crypto ecosystems in Hong Kong.

Frequently Asked Questions (FAQ)

Q: Is the VATP license the same as holding a Type 1 or Type 7 license?
A: No. The VATP permission is granted under AMLO for non-security token trading. Type 1 and Type 7 are SFO licenses required for securities-related activities. Full compliance often requires both.

Q: Can I operate without any license if I only serve overseas users?
A: If your platform actively markets to Hong Kong residents or allows HK IP access, the SFC may still consider you subject to regulation. Physical location doesn’t override targeting rules.

Q: What does “deemed licensed” mean?
A: It means the platform submitted a complete VATP application before June 1, 2023, and is allowed to operate temporarily under strict conditions until final approval.

Q: Do I need a license to run a crypto wallet app?
A: Only if you provide custodial services as part of a trading platform. Non-custodial wallets generally fall outside SFC scope.

Q: How long does it take to get fully licensed?
A: Typically 6–12 months, depending on application completeness, business model complexity, and engagement with regulators.

Q: Can I apply for multiple licenses at once?
A: Yes. The SFC encourages consolidated applications for firms offering integrated services (e.g., trading + asset management).

Operating a compliant virtual asset exchange in Hong Kong isn't about collecting every available license — it's about strategic alignment between your business model and regulatory expectations. By securing the right combination of Type 1, Type 7, and VATP permissions, while considering future expansion into advisory or fund management via Type 4 or Type 9 licenses, you position your platform for sustainable growth in one of the world’s most sophisticated financial markets.