Analysis of the Regulatory Framework for Virtual Asset VA OTC in Hong Kong: Compliance Pathways and Strategic Considerations

Author: Aiying pony

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In the summer of 2025, the virtual asset (VA) industry in Hong Kong welcomed another historic moment. The Hong Kong Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) jointly released the "Public Consultation on Legislative Proposals for Regulating Virtual Asset Trading" (hereinafter referred to as the "consultation document"), officially bringing the over-the-counter (OTC) market, which has long been in a "regulatory vacuum" zone, into the regulatory spotlight. This is not only a key move in Hong Kong's efforts to complete its VA regulatory framework following the implementation of the virtual asset trading platform (VATP) licensing system in June 2023, but also marks the local OTC market's farewell to wild growth and its entry into a new era of "compliant development."

For many institutions engaged in VA exchange, brokerage, and bulk trading in Hong Kong, this consultation document is both the Damocles Sword hanging above and the "North Star" guiding the future direction. It clarifies the boundaries of regulation, licensing requirements, and operational guidelines, laying the institutional foundation for the long-term healthy development of the market. Before the second round of public consultation at the end of August, Aiying learned that many offline virtual currency exchange shops have already begun to close such services, and some even hope to find buyers to transfer them. However, opportunities and challenges coexist. Under the new regulations, how to accurately interpret policy intentions, formulate efficient licensing application strategies, and respond to profound changes in operational models has become a core issue that all market participants must face. During this period, we have also received numerous related inquiries, so ahead of the second round of consultations, we will provide an analysis and also collect some industry feedback for the SFC. It should be emphasized that since the specific licensing details and information will only be clarified after the second round of public consultation at the end of August, this analysis is more of a forward-looking interpretation based on Aiying's current exchanges with relevant regulatory understandings.

The digital asset exchanges on the streets of Hong Kong mark the transition of virtual asset services from online to offline, and also give rise to new regulatory demands. As a professional consulting institution specializing in the compliance of virtual assets, Aiying has always been at the forefront of market and regulatory dialogue. This article will provide a comprehensive and multidimensional analysis of the new regulatory policies based on our in-depth study of official consultation documents, combined with the key insights gained from Aiying's long-term close tracking of industry and regulatory dynamics. We will penetrate the surface of policy texts to directly address the strategic considerations and market logic behind them, focusing on three core sections: "license application strategies," "market operation challenges," and "interpretation of regulatory policies." Our aim is to provide all market participants—whether traditional exchange shops, emerging online OTC platforms, or traditional financial institutions intending to enter this field—with a compliance roadmap that is both forward-looking and practical, helping everyone seize opportunities and maintain stability during the new round of industry reshuffling.

Part One: Regulatory Changes and Core New Policies: Strategic Shift from 'Customs Regulation' to 'Unified Licensing by the CSRC'

To understand the essence of the new policy, it is essential to clarify the evolution of its context. This consultation plan did not emerge out of thin air, but has undergone careful policy iterations. The most significant change is undoubtedly the strategic adjustment of the regulatory body, which reflects the Hong Kong government's profound contemplation on the philosophy of regulating the virtual asset market.

1. The Evolution of Policies: A Thoughtful Adjustment of Regulatory Entities

Hong Kong's regulatory exploration of OTC business began in early 2024. At that time, the FSTB released the first round of public consultation, proposing to establish a new system under the Anti-Money Laundering and Counter-Terrorism Financing Ordinance (AMLO), with the Hong Kong Customs and Excise Department (Commissioner of Customs and Excise, CCE) responsible for licensing VA OTC service providers. The original intention of this proposal was mainly to incorporate OTC business, particularly the physical "money exchange" shops that were under great scrutiny at that time, into the regulatory framework from the perspectives of anti-money laundering (AML) and counter-terrorism financing (CFT), in order to close potential loopholes for illegal fund flows.

According to the consultation document from February 2024, the proposal at that time focused on "anyone providing spot trading services for any virtual assets operating in Hong Kong," and suggested that Hong Kong Customs act as the licensing authority. This idea is consistent with the traditional responsibilities of Customs in regulating money service operators (MSO).

However, after months of industry consultation and internal discussions, the latest plan announced in June 2025 underwent a fundamental change. The regulatory baton has been passed from Customs to the Hong Kong Securities and Futures Commission (SFC). This change is far more than a simple departmental function adjustment; it represents a strategic elevation. According to Aiying, behind this strategic shift is a positive response from the regulatory authorities to industry feedback. The industry widely believes that if different institutions oversee similar business functions, it may lead to the risk of "regulatory arbitrage" due to inconsistent regulatory standards, which is detrimental to the long-term stability of the market. Therefore, unifying VA Dealing services under the more experienced financial regulatory authority—the Securities and Futures Commission—is the inevitable choice to ensure regulatory consistency and maintain fair competition in the market.

2. "Same shares, same rights" regulation: the underlying logic behind the principle

"Same Activity, Same Risks, Same Regulation" is the golden rule that runs through all financial innovation regulation in Hong Kong. The decision to hand over the VA Dealing services to the Securities and Futures Commission for unified regulation is a concentrated embodiment of this principle. The design logic of the new framework is to regard VA Dealing service providers as equally important market intermediaries as "Broker-Dealers" in the traditional financial world and "VATP" in the emerging digital asset world, applying the same level of regulatory standards to them.

· Benchmarking against Category 1 regulated activities (securities trading):

The consultation document clearly states that the application fee and annual fee for the VA Dealing license will align with the SFC's Type 1 regulated activity (securities trading) license. According to Aiying, the regulatory authorities strongly recommend that institutions applying for the VA Dealing license also apply for License Type 1. The logic behind this is similar to the requirement for the VATP license to be bundled with License Type 7, aiming to create a "safety net" that can cover all potential risks, preventing license holders from unintentionally violating regulations due to changes in the legal nature of trading products.

· Benchmarking the VATP licensing system:

The new VA Dealing license directly references the regulatory framework of VATP in many core requirements, such as Fit and Proper, financial resources, anti-money laundering measures, customer asset protection, and prohibition of market manipulation. This ensures that both on-exchange centralized matching transactions and off-exchange brokerage transactions adhere to a unified and strict set of standards for investor protection and market integrity, completely eliminating regulatory loopholes.

International Comparison Case: Hong Kong's choice aligns with international mainstream trends. For example, the EU's Markets in Crypto-Assets Regulation (MiCA) aims to establish a unified regulatory framework for crypto asset service providers across the EU, enforced by the national competent authorities of each member state (usually financial regulatory bodies). Singapore, on the other hand, incorporates digital payment token services under the regulation of its Monetary Authority (MAS) through the Payment Services Act. The commonality of these practices is that they recognize the financial nature of virtual assets and place their regulation in the hands of the most experienced and appropriately functional financial regulatory agencies. Hong Kong's unified licensing by the Securities and Futures Commission will undoubtedly enhance the international credibility and coordination of its regulatory framework, laying a solid foundation for cross-border regulatory cooperation.

3. The vast territory of the new license: comprehensive coverage of the OTC business ecosystem.

Unlike the early 2024 version consultation focusing on physical exchange stores, the latest VA Dealing service license defines an extremely broad regulatory scope, covering almost all mainstream OTC business forms currently in the market. According to the definitions in sections 2.8 and 2.9 of the consultation document, any institution, as long as its business involves:

"To enter into or propose to enter into an agreement for the acquisition, disposal, subscription, or underwriting of virtual assets, or to induce or attempt to induce others to enter into or propose to enter into an agreement; or the purpose or claimed purpose of such agreement is to guarantee that either party can profit from the earnings of the virtual assets, or from fluctuations in the value of the virtual assets."

……will be considered as engaging in VA Dealing services and must be licensed. This specifically includes:

1. Simple Trading Services:

This is the most basic OTC business, including the exchange between common virtual assets (VA-VA) and the buying and selling between virtual assets and fiat currency (VA-Fiat). Whether it is a physical exchange shop on the street or an online P2P platform, as long as it operates as a business, it falls under this category.

2. Complex Trading Services: This reflects a profound insight of regulators into the evolution of market structures. The new regulations clearly bring more complex business models under supervision, such as:

· Brokerage Activities: As an intermediary, finding trading counterparts for clients and facilitating transactions.

· Block Trading: Provide large, non-public trading execution services for institutional clients or high-net-worth individuals to avoid impacting public market prices.

· Asset management related activities: Execute VA trading instructions for funds or investment portfolios.

3. Omnichannel Coverage: The consultation document emphasizes that whether services are provided through physical outlets, online platforms, or a hybrid model, they must be treated equally and require licensing. This completely shatters the illusion held by some practitioners in the past that "the regulation of online business is vague."

In summary, the top-level design of the new regulatory policy for VA Dealing services in Hong Kong has become clear and defined, from the strategic shift of regulatory entities to the establishment of the "same share, same rights" principle, and then to the comprehensive definition of the business scope. It aims to build a unified, robust regulatory environment that aligns with international standards, laying a compliance foundation for the next stage of market development. For practitioners, a deep understanding of this macro background is a prerequisite for formulating specific response strategies.

Part Two: A Complete Guide to License Application: A Practical Guide from Pre-Communication to Fast Track

Under a clear regulatory framework, how to successfully obtain a license has become a core concern for all OTC market participants. Aiying combines consulting documents and communication with relevant regulatory authorities to outline a practical path from preparation to approval for various applicants, aiming to maximize application efficiency and success rate.

1. "Pre-communication mechanism": The first step to seize the opportunity.

Unlike the "black box" model of many regulatory license applications, the Hong Kong Securities and Futures Commission (SFC) has demonstrated a more open and pragmatic attitude this time. According to information held by Aiying, the SFC encourages potential applicants, especially institutions with innovative or complex business models, technological architectures, or compliance plans, to proactively engage in preliminary discussions before formally submitting their applications. This is not a mandatory part of the official process, but for institutions with complex business models, it is a valuable opportunity to establish mutual trust with the regulatory agency and align compliance expectations.

Aiying (艾盈) suggests:

· Seize the golden window period: The consultation period (until August 29, 2025) and the subsequent legislative period are a golden window for pre-communication. Proactively reaching out during this time can demonstrate the institution's positive compliance attitude and may have a constructive impact on the final implementation details.

· Carefully prepare communication materials: Pre-communication is not casual chatting, but rather should involve preparing a highly professional and logically clear briefing. The core content should include:

• Detailed Explanation of Business Model: Clearly describe the business process, customer groups, and profit model, and proactively identify potential regulatory risk points.

• Risk Management Framework: Demonstrate a comprehensive risk management system that covers market risk, operational risk, credit risk, liquidity risk, and cybersecurity risk.

• Core AML/CFT Program: Detail the specific processes and technical tools (such as blockchain analysis tools) for customer due diligence (CDD), transaction monitoring, and suspicious transaction reporting (STR). This is a key focus of regulatory review.

• Investor protection measures: Explain how to conduct customer risk assessment, product suitability matching, information disclosure and complaint handling mechanisms.

· Seek professional support: The quality of pre-communication directly affects the first impression of the regulators. Of course, one can also advertise and hire Aiying to assist in sorting out the business model, writing communication materials, and participating in meetings to ensure that communication is efficient and precise, avoiding detours caused by misunderstandings of regulatory intentions.

2. Multi-license layout: An inevitable choice for building a business closed loop.

Under the new regulations, a single VA Dealing license may no longer be sufficient to support a complete and competitive business ecosystem. From our industry observations, a complete cross-border payment or trading business loop often requires the collaboration of multiple licenses. For example, a typical business scenario may involve:

· MSO License (Money Service Operator): Issued by the Hong Kong Customs, it serves as the basis for handling legal currency exchange and remittance services.

· VA Dealing License (issued by SFC): Core license, used for handling exchange transactions between stablecoins and fiat currencies, or other virtual assets.

· VA Custody License (issued by SFC): If a company wishes to provide virtual asset custody services for its clients or its own business, rather than relying entirely on third parties, it must apply for this license. This will be another important regulatory system.

This combination-style layout ensures that every link in the business chain is legal and compliant, forming a complete closed loop from fiat currency to digital currency and then to custody, thereby providing smoother and more trustworthy services.

Scenario Two: Brokerage and Comprehensive Trading Platform

For traditional brokers or comprehensive financial platforms that wish to provide VA trading services to clients, regulatory expectations are clearer. Aiying has learned that the regulatory authorities strongly recommend that institutions applying for a VA Dealing license also apply for a Type 1 regulated activity (securities trading) license. The logic behind this is:

· Completeness of risk coverage: The legal attributes of virtual assets can change at any time. A token that is considered a non-security today may be classified as a security tomorrow due to changes in its functions or rights. Holding both the Type 1 license and VA Dealing license ensures that the institution's activities are always under the regulation of the SFC, regardless of the attributes of the trading subject, thus avoiding legal risks.

· The convenience and consistency of regulation: For the SFC, managing a "comprehensive intermediary" that holds multiple licenses is more efficient than managing multiple entities that hold only a single license, and it better embodies its unified regulatory standards and philosophy.

Aiying suggests: Companies should immediately conduct a strategic assessment, plan the "roadmap" for license applications in advance based on their core business and future development direction. This involves not only legal and compliance preparations but also requires prudent financial calculations to evaluate the capital requirements for various licenses (such as the 5 million HKD paid-up capital required for a VA Dealing license and the maximum 3 million HKD of liquid funds), personnel costs (at least two responsible personnel RO), and ongoing compliance maintenance expenses.

3. "Fast Track" Policy: A Shortcut for the Transformation of Existing Licensed Institutions

In order to encourage institutions that are already within the SFC regulatory framework to expand their VA business and simplify the regulatory process, the new policy has specially designed an "Expedited licensing and registration process."

According to the consultation documents and our communication, the following two types of institutions will be the main beneficiaries:

1. Licensed institutions approved by the SFC to engage in VA-related business: This includes licensed corporations that have "upgraded" their Type 1 (Securities Trading) or Type 9 (Asset Management) licenses according to the SFC circular, thereby enabling them to engage in VA-related activities. As we understand, these institutions will enjoy expedited access when applying for new licenses.

2. Licensed VATP: The existing 11 licensed VATPs and any future approved peers, if they wish to engage in OTC business outside of their platforms, also need to apply for a VA Dealing license and can enjoy a fast track.

Case Interpretation (Successful Transformation Prediction):

Taking Guotai Junan International as an example, the company announced in June 2025 that its No. 1 license has been approved for upgrade by the SFC, allowing it to provide VA trading services. For institutions that have already undergone the SFC's stringent review of VA business and established corresponding internal control and risk management systems, the application for an additional VA Dealing license will undoubtedly simplify the approval process significantly. The SFC no longer needs to start from scratch to evaluate their corporate governance, anti-money laundering systems, and management experience, but can focus on the unique operational processes and risk points of OTC business. This will enable them to seize the compliance OTC market opportunity faster than new entrants, seamlessly connecting their large existing customer base to a broader range of VA product services.

4. Transition period arrangements: No "automatic transition" is set, compliance requires "proactive onboarding".

For the hundreds of existing OTC service providers in the market (especially physical exchange shops and online platforms), the transition arrangements are crucial for their survival. This consultation document has released a very clear and strong signal: the regulators tend to not provide "automatic transition arrangements" (deeming arrangement).

This means that, unlike the initial period of the VATP license application which grants existing platforms a buffer period during which they are "considered to be licensed", OTC service providers will face a stricter timeline. Although the consultation document also discusses providing a six-month transition period, on the condition that service providers must submit their license applications within the first three months of the transition period, this still requires a very high level of execution.

Part Three: Three Major Challenges of Market Operations: Liquidity, Customer Acquisition, and the Changing Landscape of Stablecoins

Obtaining a license is merely a ticket to entry; the real test lies in how to tackle the deep-rooted challenges in market operations under a new regulatory framework. Sources of liquidity, methods of customer acquisition, and the uncertainty of stablecoin policies are the three major mountains that all OTC practitioners must face.

Challenge 1: The Liquidity Dilemma and Its Solutions

Liquidity is the lifeline of trading operations. Traditionally, many OTC platforms obtain depth and quotes by connecting with major exchanges worldwide. However, in the highly regulated environment of Hong Kong, this model faces challenges. From our industry observations, the "pre-funding" requirements imposed by the VATP license, which necessitate that traders deposit a large amount of their own funds as margin or collateral with upstream liquidity providers, may also extend to OTC operations. This significantly occupies capital and reduces the efficiency of fund utilization, which is undoubtedly a heavy burden for OTC operations characterized by high trading volumes and thin profit margins.

Fortunately, the regulators have clearly recognized this issue. The consultation documents and our industry observations reveal positive signals that regulation is exploring a way to balance risk and efficiency.

· New Policy Opportunities:

Paragraph 2.22 of the consultation document presents an important option: "Allow licensed VA Dealing service providers to obtain or dispose of VA for clients through non-SFC licensed VATP or other liquidity providers." This is a significant breakthrough, indicating that licensed OTCs in Hong Kong may potentially reconnect to the global liquidity network.

· Regulatory "Notice":

According to Aiying, the SFC is conducting an in-depth study of liquidity issues and may soon launch new, more flexible solutions to balance risk control and market efficiency.

Aiying Strategy Recommendation:

To seize this opportunity, the OTC platform must meet the strict "investor protection measures" proposed by the SFC. We recommend that the platform prepare in advance in the following aspects:

1. Establish a strict Counterparty Due Diligence process:

Establish a comprehensive evaluation system for overseas exchanges or liquidity providers targeted for integration. The evaluation criteria should include the regulatory status of their location, compliance level, financial condition, technical security, and market reputation. Only collaborate with platforms that are well-regulated in recognized jurisdictions (such as regions that comply with FATF standards).

2. Adopt a "Back-to-back Transactions" model:

In terms of technology and operational processes, ensure that customer trading instructions correspond one-to-one with the trading instructions of the platform itself at upstream liquidity providers, allowing for real-time hedging. This can minimize the platform's own risk exposure and demonstrate to regulators that it primarily acts as an intermediary rather than a speculator.

3. Strengthen risk disclosure and client asset custody:

· Adequate risk disclosure: In the client agreement and transaction confirmation, it must be clearly and explicitly communicated to the client that their transactions may be executed on platforms outside of Hong Kong, which may have different regulatory standards, and disclose the associated counterparty risks.

· Mandatory use of licensed custodians in Hong Kong: This is the most critical link. The consultation documents repeatedly emphasize that the client's virtual assets must ultimately be held by a licensed VA Custodian in Hong Kong. This means that even if the transactions occur overseas, the settled assets must be returned to a compliant custodian account in Hong Kong. This creates a risk closure of "transactions outside, assets inside."

It is recommended that the OTC platform immediately start designing risk control and operational processes that meet the above requirements, and actively seek compliant and reliable liquidity partners globally, as well as local licensed custody solution providers in Hong Kong.

Challenge Two: The Compliance Boundaries of Customer Acquisition Methods

In the digital age, the boundaries of business are increasingly blurred, and the definition of "Active Marketing" has become highly challenging. However, this is precisely the key line that determines whether an institution needs to accept SFC regulation. Aiying has learned that, although regulators also recognize the lagging nature of the existing definition in the digital age, it does not mean that enforcement will be relaxed.

Paragraph 2.33 of the consultation document explicitly prohibits any unlicensed person from "actively promoting" their VA Dealing services to the public in Hong Kong or elsewhere. For OTC practitioners, this means that many customer acquisition methods that were previously commonplace may now cross the line. Hong Kong's cryptocurrency over-the-counter (OTC) shops will face strict customer acquisition and operational compliance requirements under the new regulations. Aiying Compliance Suggestions:

· Comprehensive review of marketing channels:

Companies must conduct a thorough compliance review of all their marketing activities. This includes but is not limited to:

Social Media: Does the content posted on platforms such as Twitter, Telegram, Facebook, etc., include direct links, promotional activities, or service recommendations?

KOL/Influencer Collaboration: Should we pay KOLs in Hong Kong to promote our services?

Online Advertising: Have targeted ads been placed for Hong Kong IP addresses?

Offline events: Will there be seminars, lectures, and other activities held in Hong Kong, and will there be on-site guidance for account opening?

· Adopt "passive response" as the core strategy:

Before obtaining a license, the safest strategy is to ensure that all information directed at the Hong Kong public is neutral and informative rather than promotional. For example, industry research reports and market analyses can be published, but it should avoid including strong calls to action such as "trade now" or "register to receive gifts." Clients should actively seek out information rather than passively receiving marketing messages.

Prepare for licensed readiness for "proactive marketing":

Once licensed, companies will have the right to "active marketing." However, all marketing materials must still adhere to the strict regulations set by the SFC regarding advertising, ensuring that the information is accurate, non-misleading, and fully discloses risks. It is recommended that companies establish an internal review process for marketing materials in advance.

Although the definition of "active marketing" may not have a final conclusion in the short term, the principle of regulation is clear - to protect Hong Kong investors. Therefore, adopting a more conservative strategy than what the regulations literally require is currently the optimal choice for risk avoidance.

Challenge Three: Market Uncertainty Under Stablecoin Policies

Stablecoins, especially USDT, are at the core of the current OTC market trading. To accurately grasp its future direction, a deep and prudent cross-validation of Hong Kong's complex regulatory framework is essential. This involves not only the interpretation of individual regulations but also the interaction of the functions of different regulatory bodies (HKMA and SFC).

Reconfirmation of Regulatory Boundaries: Role Division between HKMA and SFC

First, a fact-based judgment is: The Hong Kong Monetary Authority (HKMA) will implement the "Stablecoin Regulation" effective August 1, 2025, which primarily regulates entities "engaged in the issuance of fiat-backed stablecoins (FRS) in Hong Kong." The regulation does not directly prohibit the circulation or trading of stablecoins issued overseas (such as USDT) in Hong Kong. This is a key legal boundary, meaning that HKMA's regulatory power is mainly focused on the "issuance end" rather than the "circulation end."

However, this does not mean that foreign stablecoins can be traded in an unregulated manner in Hong Kong. The true "gatekeeper" is the Hong Kong Securities and Futures Commission (SFC), which indirectly sets the compliance threshold for the circulation of stablecoins in Hong Kong through the regulation of market intermediaries (i.e., future licensed OTC service providers and existing licensed VATPs).

SFC's admission criteria: The logical trace from "consultation paper" to "VATP guidelines" How does the SFC set this threshold? The core of the answer lies in paragraph 2.19 of the "Public Consultation on Legislative Proposals for the Regulation of Virtual Asset Trading" document. This paragraph is the cornerstone of this analysis, and its authority and timeliness are beyond doubt, as it directly reflects the SFC's expectations for future OTC license holders. This paragraph clearly states:

"...For retail investors, licensed or registered providers of virtual asset trading services should ensure that their token issuance procedures are consistent with the VATP procedures..."

This statement establishes the logic from OTC service providers (future) → benchmarking VATP (now) → complying with the "Acceptance Index" standard.

A prudent analysis of the "Acceptance Index" and the current state of USDT.

The key here lies in the definition of "Acceptance Index." The SFC has not provided an official, static "Index White List" or "Token White List." Instead, it has established a set of principled standards, requiring index providers to be reputable, independent, and for the methodology of index compilation to be objective and transparent. The responsibility for conducting due diligence and demonstrating that the index relied upon meets SFC standards rests entirely with the licensed platform itself.

Currently, USDT has been listed on some licensed VATPs in Hong Kong and is open to retail. This also means that the relevant licensed VATPs have completed their own due diligence and concluded that USDT is one of the components in two or more indices that they selected and deemed to meet SFC standards. This is a business decision taken by the platform based on its own risk assessment and compliance judgment.

Risk Warning: This qualification is not permanent. If USDT is removed from the index in the future for any reason (such as liquidity, governance, legal risks, etc.), or if the SFC raises the standards for index providers, the platform will be obligated to reassess and may suspend the provision of USDT trading to retail investors.

Part Four: Conclusion and Outlook: Embrace Regulation, Build the Future on a Foundation of Compliance

The new regulatory policies for the OTC market of virtual assets in Hong Kong are like a profound structural reform, reshaping the entire industry ecosystem with unprecedented intensity. After experiencing the growing pains from disorder to order, the market is standing at a brand new historical starting point. As witnesses and participants in this transformation, Aiying believes that only by deeply understanding and actively embracing regulation can one remain invincible in future competitions.

1. Future Outlook: Aiying's Perspective

Standing at the current point in time and looking to the future, we foresee the following profound changes in the Hong Kong VA OTC market and the entire digital asset ecosystem:

· The market landscape will accelerate differentiation and integration: A large number of small, non-compliant exchange shops and platforms lacking capital strength, compliance capabilities, and technical foundations will face elimination or acquisition. Market share will concentrate among a few leading institutions, which will hold multiple licenses (such as VA Dealing + VA Custody + Type 1/9), possess comprehensive service capabilities (trade execution, asset custody, wealth management), and effectively connect global liquidity as "super intermediaries."

· The ecosystem will achieve deep interconnection: The VA Dealing license does not exist in isolation. In the future, licensed OTC service providers will form a closer and interconnected ecosystem with licensed VATPs, licensed VA custodians, licensed stablecoin issuers, and traditional financial institutions. For example, OTC platforms provide bulk trading liquidity to VATPs, while VATPs offer compliant trading settlement channels to OTC platforms; custodians provide secure asset custody services for all market participants; and compliant stablecoins become the underlying settlement tool for the entire ecosystem. This interaction will jointly build a solid infrastructure for Hong Kong's Web 3.0 and digital finance.

· Innovation will accelerate on the track of compliance: With the clarification of the regulatory framework, market uncertainty will be greatly reduced. This, in turn, will stimulate more innovation within compliance boundaries. For example, compliant OTC services can lead to the development of more structured products, derivatives, and wealth management solutions aimed at professional investors and institutions. Traditional financial institutions will also be more confident in connecting their asset tokenization (RWA) projects with licensed VA trading and custody ecosystems, thereby truly achieving the integration of digital finance and the real economy.

2. Final recommendations for practitioners

Before the second round of consultation meetings at the end of the month, Aiying is also actively preparing and drafting consultation opinions on issues related to the new licensing system, with the aim of reflecting the true voices of the industry to the Securities Regulatory Commission. We sincerely welcome practitioners from OTC institutions to contact us for communication and to share the confusion and challenges you encounter in actual operations. Your valuable opinions may be collectively organized by us and anonymously included in the formal documents submitted to the regulatory authorities, contributing to the shaping of a more reasonable and operable regulatory environment.

Hong Kong is striving to take the lead in the global Web3.0 competition with its unique institutional advantages and open posture. This profound transformation driven by regulation is paving a golden road to the future for truly visionary and prepared builders. Embracing regulation is the key to steady and sustainable progress.

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