Hong Kong’s securities regulator has proposed a major overhaul of rules for virtual asset trading platforms, signaling a sharper push to bring the sector under stricter supervision. The draft framework would require operators to secure a new “Type 8” license, adding another layer of formal approval for firms serving retail and institutional traders.

According to the proposal, the rules would also raise expectations around capital reserves, custody controls, and investor safeguards. The move is part of a broader regulatory trend as financial authorities in major markets seek to reduce risks tied to digital assets after years of rapid growth, market failures, and investor losses.

The Securities and Futures Commission said the changes are designed to improve transparency and strengthen protections for market users. If adopted, the new regime would place Hong Kong closer to the stricter compliance models emerging in Europe and other financial centers.

The consultation marks another step in Hong Kong’s effort to position itself as a regulated hub for crypto activity while tightening the standards firms must meet to operate there.