Hong Kong (Xiangang) is one of the four “Asian tigers”, also known as a major financial hub of the world. Over the past few years, this jurisdiction has done everything necessary to attract as many international investors as possible. One of the rapidly developing sectors of Hong Kong’s economy is the crypto sector. Conducting a cryptocurrency business here is considered a completely reasonable step on the way to obtaining significant benefits and increasing income. And thanks to the amendments to the “Law on Combating Money Laundering and Terrorist Financing” adopted in 2022, the sphere of electronic coins moved from the gray zone to the legal plane. As a result, today, registering a cryptocurrency company in Hong Kong is a real chance to become a participant in the large crypto market on legal grounds.

 

The Lawrange law firm offers a range of legal consulting services, which will help the process of legalizing your crypto activity in Hong Kong to go smoothly and comfortably. We have sufficient experience in successfully solving similar tasks, we are familiar with all the legal peculiarities and “pitfalls” of licensing in the Asian region. Our team works like clockwork – clearly, harmoniously, without failures, so registration of a crypto company in Hong Kong will start bearing its first fruits for your business quite quickly.

 

What types of virtual assets can you work with in Hong Kong?

Hong Kong law gives cryptocurrencies a special legal status – this is one of the distinguishing features of the special administrative region of China. At the same time, all digital forms of value represented by stableblocks, service tokens, and tokens backed by securities are considered virtual assets here. The exception is digital representations of fiat funds issued by central banks.

 

The Regulator’s requirements for companies are determined by the provision of the aforementioned law of 2022, according to which virtual assets are divided into two types:

 

  • Virtual assets are directly cryptocurrencies such as Bitcoin, Ether and others, which are used as virtual goods. According to the latest legal norms, they can act as a unit of account and/or as a means of accumulating added value. They are also available for storage, exchange and sale.
  • Security Token – tokens in the form of securities, which include, for example, Bitcoin futures, certain ICO tokens, etc. In other words, cryptocurrencies of this type have the characteristics of securities, which is why they are sold on the futures and stock markets.

 

Why is a crypto license in Hong Kong attractive?

Hong Kong leads among other countries in the speed of adoption of cryptocurrencies. This jurisdiction is open to investment in the blockchain sector, as evidenced by the light tax treatment of companies engaged in digital currency trading. It is noteworthy that the highest density of Bitcoin ATMs is noted in a small area of Hong Kong – 2 machines per 100,000 people. The local government is aware of the potential of crypto-assets, so it is making all necessary efforts to attract the best representatives of the industry.

 

International reputation and trust

For more than 150 years, Xiangang was a colony of Great Britain, which inherited not only generous economic aid, but also progressive views in matters of legal and economic development of the state. Today, it is one of the top global cities, along with London and New York, and enjoys maximum trust from international business. For 17 years in a row, Xiangyang has been leading the list of countries with a high level of economic freedom. In addition, the country is de jure not an offshore zone, due to which it is considered prestigious to register a company and obtain a license for cryptocurrency exchange in Hong Kong.

 

Progressive legislation and regulation

For foreign investors, this jurisdiction can offer a perfect legal system that depends on China. At the same time, the local government is taking measures to further develop crypto-businesses and technologies like blockchain by creating appropriate regulatory norms. To improve the security of entrepreneurship in the cryptosphere, a modern licensing system for market operators and financial services is being created and implemented here. At the same time, retail financial operations with crypto are fully legalized.

 

Favorable business environment

Hong Kong is recognized by the world community as a major financial center with a stable political situation. A simple and clear organization of business is practiced here, as well as a flexible taxation system and a transparent legal framework. Currently, Hong Kong is ahead of the United States and Japan in terms of organization and business operations, which is facilitated by an open economic system and government support for entrepreneurs. The state does not interfere in business affairs, does not practice currency control, and it is possible to open accounts in international banks without any particular difficulties. A variety of payment services helps entrepreneurs manage their finances easily.

 

Geographical location and access to the Asian market

Hong Kong is located at the intersection of the main trade and economic routes, very close to the centers of world development – the USA and China. It is here that one of the deepest ports of natural origin operates, which ranks 4th in the world in terms of freight traffic. Hong Kong, in connection with its favorable geographical position, plays the role of the gateway to China, through which Western investors easily gain access to the Asian market. Thanks to established trading relationships, ease of doing business and reliable infrastructure, anyone wishing to obtain a cryptocurrency license in Hong Kong has the opportunity to expand beyond the local market and attract an international customer base. The combination of these advantages makes Hong Kong an attractive location for companies looking to work in the blockchain industry and take advantage of the opportunities offered.

 

Types of cryptocurrency licenses in Hong Kong

The emergence of the cryptocurrency business has prompted the Xiangang government to develop the most effective control scheme possible for this type of economic activity. In this regard, in order to legally conduct a cryptocurrency business, it is necessary to obtain a license that corresponds to your type of activity.

 

Cryptocurrency Exchange

Those wishing to register a cryptocurrency exchange company with Virtual asset status do not need a license. In the case of Security Token, it is necessary to apply to the SFO (Shiangan Securities and Futures Commission) for a Type 1 license. Such a license for the exchange of cryptocurrencies in Hong Kong opens access to all necessary operations in the territory of this jurisdiction. When deciding on the registration of a firm specializing in the exchange of not only digital but also fiat means, it will be necessary to obtain a Hong Kong financial license (called a Money Service Operator).

 

Cryptocurrency Wallet

Company owners that provide crypto wallet services under licensing regulations must securely store customers’ money and virtual assets through their wholly-owned subsidiaries (“affiliates”). No more than 2% of customers’ cryptocurrency can be stored on hot wallets. In addition, each platform operator must develop and implement written internal policies and procedures for managing private keys. It must be proven that all cryptographic data and keys are securely generated and stored, and that backup copies are available. Moreover, platform operators cannot manipulate client assets (transfer them to third parties, lend, etc.). The company must also insure the risks associated with the storage of cryptocurrencies of its customers.

 

Cryptocurrency Crowdfunding

The licensing standards for automated trading service providers (ATS) apply to market participants. Obtaining a Hong Kong crowdfunding platform operator license from the SFO is required for persons carrying out regulated activities in this jurisdiction. Such entities are required to comply with the SFC’s Code of Conduct, which requires licensed intermediaries to obtain information about clients’ financial position, experience and investments. If the entrepreneur provides a payment service, issues funds that can be used to pay for goods, it is necessary to obtain a Stored Value Facility (SVF) license. This license also applies to intermediaries acting as issuers of securities.

 

Cryptocurrency Brokerage

When receiving a license to conduct crypto-brokerage, the company is obliged to perform the functions of a trading agent and provide opportunities for negotiating agreements between clients. At the same time, it is not possible to advertise a specific type of cryptocurrency and products that offer profitability, lending. A crypto brokerage must store up to 98% of clients’ assets in a cold wallet, and in some cases a separate license from the SFC may be required. In the case of managing a fund that invests in virtual assets, you need to obtain a forex broker license type 9.

 

Importantly! Obtaining cryptocurrency authorization in Hong Kong should be done according to the legal nuances of each specific situation. To prevent the risk of complications when obtaining a crypto license, we recommend using the services of Lawrange specialists. We will help you choose the type of license according to your type of activity, as well as successfully deal with bureaucratic obstacles.

 

Requirements for opening a crypto company

Obtaining a specific license is preceded by the direct opening of a company that will own and manage the exchange platform, as well as engage in cryptocurrency operations of various kinds. At the same time, it is important to fulfill a number of requirements, which are mainly put forward for the management, founders and a package of documents drawn up in accordance with local legislation. Yes, opening a crypto company in Hong Kong is only possible if:

 

  • Registration directly in or outside of Hong Kong (subject to certain legal regulations).
  • The presence of at least two Responsible Officers (RO) in the team. At the same time, one of the employees must have local registration.
  • If the management staff has all the necessary knowledge in matters of cryptocurrency activity and has sufficient experience.
  • Strict compliance with the AML/KYC policy – rules and measures to protect against financial crimes, the implementation of which is an important proof of the company’s reliability.
  • If the licensee can prove his creditworthiness and the availability of a sufficient financial position to conduct crypto activities.
  • The applicant has a corporate image and competence in the market for the provision of cryptocurrency services.
  • Development by the applicant of a scheme for submitting reports on suspicious activity and carrying out checks on each client.

 

The Hong Kong government does not impose any restrictions on the share capital and the number of shareholders. However, the presence of a resident corporate secretary is mandatory.

 

To conduct crypto activities, entrepreneurs in Hong Kong most often prefer two organizational and legal forms of business to choose from:

 

  • A company with limited liability by shares – mainly for conducting commercial activities. Such a legal entity does not need a business license when operating outside Hong Kong. Such a company is also exempt from paying taxes.
  • A limited liability company is the most popular option among non-profit organizations.

 

Importantly! We recommend that you approach the choice of the type of future company with all responsibility. Access to certain benefits, as well as obligations and administrative tasks of the firm, depend on this. Specialists of Lawrange will consult in detail on this issue and will tell you which organizational and legal form is best suited for your business.

 

Requirements for obtaining a crypto license

Licensing should begin after company registration. There is no need for this only if all operations with cryptocurrency are carried out outside the intermediary platform. At the same time, enterprises must meet a strict set of regulatory requirements – basic licensing conditions. The main emphasis of the ongoing licensing is on the protection of investors. For this, the SFC commission:

 

  • Carefully studies the company and structure of applicants for a crypto license.
  • Assesses the reliability of the business model presented by the applicant. In this, it is necessary to provide a detailed policy of risk management and other measures of listing, counter-manipulation of the market, etc.
  • Checks to what extent licensees are provided with the financial resources necessary to carry out stable and uninterrupted crypto activities in Xiangang.

 

The Hong Kong cryptocurrency trading license for companies selling and distributing Security Tokens allows services to be provided only to professional investors. At the same time, the main requirements for licensees are:

 

  • Ability to securely store client assets.
  • Compliance with “Know Your Customer” rules.
  • Absence of conflicts of interest.
  • Compliance with the criteria for admitting virtual assets to trading.
  • Maintaining cyber security and maintaining accurate accounting and auditing.
  • Prevention of any manipulations on the market.

 

How crypto companies are licensed in Hong Kong

If all mandatory conditions and requirements have been met when opening a company, it is necessary to apply to the Securities and Futures Commission (SFO) to issue a crypto license in Hong Kong. For this, a corresponding application is submitted, filled out in accordance with the requirements of the current legislation.

 

Stages and time frames

The licensing procedure takes place in several steps:

Order a consultation

 

  • Prepare a package of necessary documentation confirming and reporting on the activities of the company, management, and hired employees. Copies of documents of the director, beneficiaries, a declaration of compliance of the specified persons with the proposed requirements, and an authorization letter should also be included here. In case of questions, commission members may need other additional documents.
  • Submit and register an application for a license with the SFO, which is accompanied by the payment of certain duties.
  • Submit an application for approval of the premises to be used for the storage of records or documents required under the Regulations.
  • The applicant company (as well as the founders, top management) undergoes a special compliance test. This makes it possible to understand how suitable the applicant is for providing certain crypt services. The SFO commission pays attention to the experience, qualifications of the team, as well as the integrity of the mentioned persons, including checking whether they have been involved in liquidation or bankruptcy procedures in the past.
  • Direct issuance of a license with the help of which the applicant will be able to carry out crypto-currency activities.

 

In the case of submission of correctly executed documents, the terms of consideration of the application with the subsequent issuance of the license may be 3-5 months. The length of this process can be avoided only with the help of Lawrange professionals.

 

Why should you contact our company?

We have extensive experience in international crypto business registration, and are also intimately familiar with the Xiangang legal system. Our specialists will be able to establish a crypto exchange and register a crypto license in Hong Kong in the shortest possible time. Cooperation with us has a number of advantages:

 

  • Promptness – we quickly get involved in the work, and thanks to the trained personnel and the developed material and technical base, we promptly solve all the issues that arise in the process of the case.
  • Involvement – the client’s problems, his views on business and wishes must be taken into account.
  • Professionalism – we connect experienced, qualified specialists with a high professional level of legal services to work.

 

Conclusion

Hong Kong (or Xiangang otherwise) has an established reputation as a financial giant. Foreign investors are offered optimal tax conditions, developed infrastructure and banking system for successful business activities here. Hong Kong is a gateway to both Asian and global markets. Thanks to established trade relations, ease of doing business and reliable infrastructure, companies can go beyond the local market and attract an international client base. Therefore, many people are interested in the license for cryptocurrency in Hong Kong – a permission document that opens up the opportunity for owners of crypto platforms to provide a wide range of services. The licensing procedure involves compliance with a number of requirements and conditions. To make this process as successful and efficient as possible, we recommend using the help of Lawrange.

 

FAQ

What are the advantages of a crypto license in Hong Kong compared to other jurisdictions?

The main advantages include prestige on the world market, the possibility of opening a current account in the world’s banks, access to a profitable partnership with China and other Asian regions.

 

How much will it cost to get a crypto license in Hong Kong?

Taking into account the costs of creating infrastructure, submitting an application, paying for the services of a consulting firm that will deal with the organizational process, and paying fees, the cost of a license can start from several tens of thousands of dollars.

 

What taxes does an entrepreneur expect when obtaining a crypto license in Hong Kong?

The size of the profit rate corresponds to 16.5% when receiving a profit near this jurisdiction. If the activity is conducted outside the region, the rate is 0%.

 

 

 

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