Hong Kong's Securities and Futures Commission (SFC) issued a supplemental clarification on June 10, addressing ambiguities from its May 22 circular. The key takeaway: licensed virtual asset trading platforms can open new accounts for mainland Chinese investors and continue serving existing clients — as long as the services are not "provided within mainland China." This ends months of debate over whether licensed exchanges could serve mainland users at all.
Key Points: Compliance for New Accounts, Geographic Restrictions
The SFC's list of requirements includes:
- Licensed firms may open new accounts for mainland investors, but must fully comply with all account-opening rules (e.g., KYC, anti-money laundering checks);
- Services to existing clients may continue, provided those services are not delivered within mainland China;
- The restrictions apply not only to Hong Kong institutions but also to financial firms from other jurisdictions when serving mainland investors;
- All firms must adhere to Hong Kong laws and the regulations of any applicable jurisdiction.
In practice, if a licensed exchange has a sales office in Beijing or conducts ground-level marketing there, that qualifies as "provided within mainland China" and is prohibited. However, if the client is physically in Hong Kong or another overseas location — even holding a mainland passport — services delivered outside the mainland are permissible.
Defining 'Provided Within Mainland China': A Clear Red Line
The SFC explained that the May 22 joint circular contains two essential requirements. First, geographic service limitation — licensed firms may serve mainland clients, but the actual service must occur in Hong Kong or the client's overseas location, not on the mainland. Second, expanded scope — the rule applies beyond Hong Kong institutions; any financial institution from any jurisdiction serving mainland investors faces the same constraint. For instance, a Singapore-licensed exchange soliciting mainland investors would also breach the rule if it operates a sales office in Shenzhen.
Hong Kong launched its virtual asset trading license regime in 2025, with exchanges like OSL and HashKey already licensed. This clarification gives them a clear compliance boundary. Industry sources say platforms now rely on IP geolocation, client declaration, and account-opening location to verify where the client is receiving services, ensuring no infringement on mainland territory.
Hong Kong Crypto Regulation Shifts from Licensing to Enforcement
The SFC's latest circular signals a transition from the licensing phase to substantive supervision. The regulator is expected to conduct regular inspections and spot checks to ensure licensed firms comply with account-opening and geographic service rules. This aligns with Hong Kong's broader regulatory moves on stablecoins and over-the-counter trading, strengthening its position as a compliant international virtual asset hub.
For institutions seeking a license, the compliance cost is steep. According to HashKey's CEO, obtaining a Hong Kong virtual asset trading license costs at least tens of millions of Hong Kong dollars. As of now, 11 institutions have received pre-licensing approval. The new clarification reduces regulatory uncertainty, giving them clearer customer service boundaries. Overall, the SFC's interpretation strikes a balance between openness and control: it allows licensed firms to serve mainland clients (in overseas contexts) while strictly prohibiting operations on the mainland, avoiding conflict with China's own financial regulatory policies. This framework is expected to attract more global crypto platforms to Hong Kong, but demands stronger compliance and technical risk controls from all players.