Hong Kong Will License Crypto Brokers, Custodians and Advisers. Is It Overtaking the US as the Regulated Market?

Hong Kong will require a license for every business that trades, holds, advises on, or manages cryptocurrency for clients. The proposed Hong Kong crypto licensing law will encompass all four services under one framework, with the city’s Financial Services and the Treasury Bureau aiming to present this legislation to the Legislative Council before the end of 2026, as stated in a government announcement on May 26, 2026.

While the US is also taking steps toward regulation, it is following a different path. In early October 2026, the SEC proposed allowing investment advisers to hold Bitcoin (CRYPTO:BTC) and other cryptocurrencies for their clients, although Congress’s main crypto legislation remains stalled.

Hong Kong intends to solidify its regulations through an established law, while US agencies are developing policy under existing authorities. This raises the question: which market is creating a more sustainable framework for regulated cryptocurrency?

Hong Kong’s Crypto Licensing Would Cover Advisers and Fund Managers

The licensing system will serve as a crucial filter for businesses before they can start accepting customer funds. Currently, Hong Kong licenses crypto exchanges, and the new law will expand to include four additional service providers: dealers who trade cryptocurrency on behalf of clients, custodians who securely hold assets, advisers who provide recommendations, and managers who oversee crypto investments.

The inclusion of advice and management licenses represents a significant shift. These licenses will cover individuals who guide clients on which cryptocurrencies to invest in and firms that operate crypto funds, applying similar standards to those used for traditional stock advisers and fund managers. The government wrapped up consultations on this proposal in May 2026, after initially presenting it in December 2025.

To obtain a license, firms must meet high entry standards. For example, a crypto dealer would need at least HK$5 million in paid-up capital (around $640,000), while a custodian would need at least HK$10 million (approximately $1.3 million), according to a summary from Davis Polk. Notably, banks already regulated by the Hong Kong Monetary Authority would be exempt from these capital requirements.

Why Hong Kong’s Crypto Law Could Outlast US Agency Rules

Hong Kong’s approach provides it with a distinct advantage. Once the Legislative Council enacts a law, only a new act can revoke it. In contrast, US regulatory agencies can revise or rescind their own regulations, meaning future SEC or CFTC sessions could alter what the current agencies propose.

Congress attempted to resolve this issue with the CLARITY Act, a bill designed to establish federal regulations for the crypto market, but it failed to progress in the Senate on September 15, 2026. This leaves the future of US crypto regulations uncertain, relying on agency proposals that are still subject to public review.

However, the US has an advantage licensing alone cannot create: its capital markets are significantly larger than Hong Kong’s. For instance, US spot Bitcoin ETFs currently manage tens of billions of dollars in client assets.

Hong Kong and the US Are Both Still Writing Their Crypto Rules

Both markets are still finalizing their regulations. Hong Kong has released the results of its consultations, but the text of the proposed bill has not yet been published, and it has not been submitted to the Legislative Council. Meanwhile, the SEC’s proposal lacks a set adoption date.

As a result, the final regulations in both regions may differ from the current proposals. Julia Leung, chief executive of the Securities and Futures Commission, noted in May 2026 that “the broad market support demonstrates the strong need for robust and comprehensive regulation.”

Is Hong Kong Overtaking the US With Crypto Licensing?

While Hong Kong is ahead in terms of establishing clear regulations, it has not fully overtaken the US as the primary regulated market for cryptocurrency. The proposed Hong Kong crypto licensing system would create a robust legal framework covering advisers and fund managers who influence consumer investments, while the US still boasts a deeper market and a larger pool of investment capital.

The decisive factor will be whether Hong Kong submits its bill to the Legislative Council by the end of 2026, including the proposed advice and management licenses. If the bill is delayed or reduced to only cover trading and custody, the US may close the gap with its evolving agency rules. However, if Hong Kong’s bill is passed intact while US regulations remain open to further changes, Hong Kong could establish a stronger regulatory foundation for years to come.

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