Hồng Kông dự kiến loại bỏ ngưỡng miễn trừ loại 9! Ngành công nghiệp: Quản lý quá nghiêm ngặt sẽ phá hủy ước mơ trung tâm tài chính Web3

Hong Kong Securities and Futures Professionals Association (HKSFPA) opposes the regulatory proposal to remove the Class 9 license exemption threshold, stating that even allocating only 1% in BTC would require a full virtual asset license, leading to disproportionate compliance costs. It criticizes the mandatory licensed custodian restriction on Web3 venture capital funds, calling for allowance of self-custody and offshore custody arrangements.

Hong Kong proposes abolishing exemption threshold; 1% allocation still requires full license

Hong Kong Securities and Futures Professionals Association (HKSFPA) publicly opposes the regulator’s proposal to eliminate the virtual asset investment “exemption threshold” for Class 9 asset management firms, pointing out that this measure would force funds with only 1% Bitcoin allocation to apply for a full virtual asset management license, resulting in disproportionate compliance costs and potentially discouraging traditional asset managers from exploring crypto assets.

HKSFPA explicitly states in its response: “We do not agree with removing the minimum threshold. The proposal abolishes the current ‘total asset value 10%’ threshold applicable to Class 9 asset managers. This means that even traditional equity portfolio managers who allocate 1% of their assets to Bitcoin for diversification would need to obtain a full virtual asset management license.”

This “all-or-nothing” approach is unreasonable. It would hinder traditional asset managers from exploring Bitcoin as an asset class and runs counter to the government’s goal of integrating Web3 with traditional finance. It imposes heavy compliance burdens for negligible risk exposure. HKSFPA strongly recommends restoring the minimum exemption, such as allowing companies holding a Class 9 license with virtual assets below a certain threshold (e.g., 10% of total assets) to be exempt from full virtual asset management licensing, perhaps only requiring notification.

Practically, a traditional fund managing HKD 1 billion that allocates 1% (HKD 10 million) to Bitcoin as a hedge or diversification would need to apply for a new virtual asset management license. The application process is complex, requiring detailed business plans, proof of team expertise in crypto assets, establishment of risk control systems, and payment of high compliance costs. For a fund with only 1% exposure, these costs are entirely disproportionate.

Three major negative impacts of removing exemption threshold

Hindering gradual adoption: Traditional institutions cannot test the waters with small amounts, being blocked at the outset

Disproportionate costs: 1% allocation incurs 100% licensing compliance costs

Contradicting integration goals: Conflicts with Hong Kong’s strategy to develop Web3 financial hub

The problem with this regulatory logic is the “one-size-fits-all” approach. It does not differentiate risk levels, treating small 1% allocations the same as 100% pure crypto funds. Risk-based regulation should be: the higher the risk, the stricter the regulation; the lower the risk, the more lenient. Removing the exemption threshold violates this fundamental principle.

Mandatory licensed custody may stifle Web3 venture capital funds

Additionally, the association criticizes the proposed requirement that assets be held only through licensed custodians, or restrictions on Web3 VC fund operations, and calls for flexible arrangements such as self-custody and offshore custody. HKSFPA states: “We strongly advocate maintaining flexibility in private fund custody arrangements. Forcing all virtual asset funds to use regulated custodians is impractical.”

There are two reasons. First, asset support issues: licensed custodians typically support only a limited number of large-cap tokens. Private equity and VC funds investing in early tokens not yet supported by local custodians would be restricted. Strict rules could effectively prohibit local managers from operating Web3 VC funds. Second, risk diversification: institutional investors usually require diversified custody arrangements (including offshore qualified custodians) to reduce counterparty risk.

HKSFPA supports the regulator’s consideration of allowing private equity/VC funds (within certain limits) to self-custody, and permitting private funds serving professional investors to use qualified offshore custodians (e.g., regulated in the US, Japan, or Singapore). Such flexibility is crucial for Web3 VC funds.

Since early project tokens are often the investment targets of Web3 VC funds, and these tokens may not yet be listed on mainstream exchanges or supported by licensed Hong Kong custodians, mandatory use of local custody would make it impossible for these funds to invest in their target assets, effectively banning Web3 VC activities. This directly conflicts with Hong Kong’s goal of becoming a Web3 innovation hub.

From an international perspective, competitors like Singapore and Dubai have adopted more flexible custody policies. If Hong Kong insists on overly strict requirements, Web3 VC funds may choose to register in jurisdictions with more friendly regulation, causing Hong Kong to miss out on this high-growth sector.

Transition arrangements and fee concerns

HKSFPA expresses concern over the lack of “deferred arrangements” (grace periods). The proposal suggests existing managers must obtain licenses before the effective date, or cease operations. Given the complexity of the application process and potential approval bottlenecks at the SFC, a “hard start” could cause significant business continuity risks. Legitimate firms might be forced to suspend operations during the approval period.

HKSFPA urges the government to implement a 6 to 12-month grace period for existing practitioners who submit applications before the effective date. Such transitional arrangements are common in regulatory reforms, ensuring new rules are implemented smoothly without unnecessary market disruption. A hard start could lead many existing operators to cease or relocate, weakening Hong Kong’s market.

Regarding costs, HKSFPA states that fees should be commensurate with those under the Securities and Futures Ordinance for Class 4 and Class 9 regulated activities. The association opposes any “premium” on virtual asset licenses, as compliance costs (e.g., blockchain analysis tools, professional audits) for these firms are already much higher than traditional companies. Additional licensing fees would further raise barriers to entry.

Overall, HKSFPA’s response reflects deep concern within Hong Kong’s crypto industry about overregulation. While appropriate regulation helps protect investors and market stability, overly strict rules could have the opposite effect, pushing innovation and capital to other markets. To truly establish Hong Kong as a Web3 financial center, a more nuanced balance between investor protection and industry development is essential.