Hong Kong Securities and Futures Commission's latest interpretative letter: Licensed crypto companies can continue serving existing clients but cannot conduct business within China.

Hong Kong Securities and Futures Commission Further Interprets the Circular Issued on May 22, Licensed Firms Only Need to Comply with Account Opening Regulations to Open New Accounts for Mainland China Clients and Continue Serving Existing Clients.
(Background: End of Transition Period > HK SFC: Unlicensed Exchanges Cannot Operate in Hong Kong from 6/1, VASP Application Status Update)
(Additional Background: HK SFC Latest Guidelines: Opening Virtual Asset Custody Financing, First Sustainable Contract Framework, Allowing Related Companies to Market-Make)

Table of Contents

Toggle

• Core Requirements of the Circular
• The Meaning of "Providing Within the Mainland"
• Background of the Hong Kong Cryptocurrency Market

After issuing the circular on May 22, the HK SFC further clarified on June 10 that licensed firms in Hong Kong only need to meet account opening requirements to open new accounts for Mainland Chinese investors and can continue serving existing clients. However, the prerequisite is that the relevant services are not "provided within the Mainland."

Core Requirements of the Circular

The key points listed by the SFC are as follows:

• Licensed firms can open new accounts for Mainland Chinese investors, but must comply with all account opening regulations
• Existing clients can continue to be served as long as the services are not provided within Mainland China
• These requirements also apply to financial institutions in other jurisdictions, not limited to Hong Kong
• Must comply with all laws and regulatory requirements of Hong Kong and the applicable jurisdiction

The Meaning of "Providing Within the Mainland"

The SFC states that the joint notice on May 22 includes two key requirements:

1. Service Location Restrictions: Licensed firms can continue to serve Mainland China clients, but services must be conducted in Hong Kong or overseas regions where the client is located, and cannot be carried out within Mainland China. This means that if a client is in Beijing, establishing a sales office or conducting marketing in Beijing would be considered "providing within the Mainland."

2. Scope Expansion: The relevant requirements are not only applicable to Hong Kong financial institutions but also extend to activities of institutions in other jurisdictions when providing services to Mainland Chinese investors.

Background of the Hong Kong Cryptocurrency Market

Hong Kong launched a virtual asset trading license regime starting in 2025, and several exchanges have already obtained licenses. This circular further clarifies the scope of services for licensed firms, bringing clearer regulatory guidance to the market.

This interpretation also indicates that Hong Kong’s crypto market is moving from a "licensing" phase toward a "substantive regulation" phase. In the future, the SFC may conduct regular inspections and spot checks to ensure licensed firms genuinely comply with account opening and service regulations.