Hong Kong authorities have broadened the scope of their regulatory partnership on audits and financial reporting to include virtual asset service providers, following a new memorandum of understanding (MoU) announced this week.
Expanded regulatory cooperation
The Securities and Futures Commission (SFC), which acts as Hong Kong’s primary securities and futures regulator, and the Accounting and Financial Reporting Council (AFRC), the statutory body overseeing accounting and audit professionals, unveiled the new agreement on Monday. This MoU extends existing regulatory cooperation to cover SFC-licensed virtual asset service providers, licensed corporations, registered open-ended fund companies, and authorized funds.
According to the SFC, the updated memorandum establishes a framework for ongoing information sharing, case referrals, mutual assistance, and coordinated inspections and investigations. The collaboration is designed to strengthen oversight of compliance and financial reporting by organizations active within Hong Kong’s evolving digital asset sector.
The agreement supersedes a prior 2021 MoU between the SFC and the Financial Reporting Council, which was renamed the AFRC in 2022 to reflect its enhanced responsibilities.
Mini dictionary: The AFRC is the independent regulator for the accounting profession in Hong Kong and holds statutory powers to regulate auditors and related disciplines within public interest entities.
Information-sharing and oversight
The MoU significantly broadens the scope of regulatory activities and aims to create a coordinated approach to overseeing both traditional and crypto-related financial service providers in Hong Kong. Regulatory cooperation now directly addresses the audit and assurance work undertaken for these institutions, reflecting growing official attention to compliance in the digital asset industry.
SFC Chair Kelvin Wong said the enhanced partnership will provide “more comprehensive oversight” for a greater number of entities operating across Hong Kong’s financial markets.
Kelvin Wong said this expanded collaboration delivers an extra layer of regulatory scrutiny, supporting investor confidence and market stability amid the ongoing evolution of the digital asset landscape in Hong Kong.
Hong Kong’s evolving digital asset sector
The timing of the agreement coincides with Hong Kong’s continued efforts to develop a robust regulatory framework for digital assets. In January, local authorities introduced draft rules targeting crypto-related advisory services. Further initiatives from the SFC have provided guidance on virtual asset margin financing and the offering of perpetual contracts by licensed service providers.
These measures reflect Hong Kong’s ongoing push to establish itself as a leading hub for compliant digital asset businesses in Asia, aiming to balance investor protection with industry innovation.
