Hong Kong Moves to License OTC Crypto Trading

Hong Kong is making another move to tighten its grip on crypto activity. After a string of scams and mounting concerns over fraud, the city is now targeting a specific area of the industry — OTC trading. The new push follows earlier steps taken around stablecoins and shows Hong Kong is serious about building a safer space for digital asset users.

Good to know

• OTC crypto businesses in Hong Kong will soon need a license.
• The policy is part of Hong Kong’s broader anti-money laundering strategy.
• A new stablecoin law kicks in August 1, with licensing required for issuers.

Hong Kong plans to introduce stricter oversight for over-the-counter (OTC) crypto trading. These are deals that happen off regular exchanges — often through in-person shops or private chat groups. That off-grid nature has made OTC trades a hotbed for scams and fraud in recent years.

Under the new proposal, all businesses involved in OTC crypto trading will be required to get a license from Hong Kong Customs. The move aims to help stop money laundering and protect small investors from getting duped.

The licensing plan falls under Hong Kong’s anti-money laundering law, which already includes crypto oversight. But the city wants to go further, especially after several public crypto scams made headlines — most notably the JP-EX case from 2023, where investors lost millions. Officials believe stricter licensing will help rebuild trust.

Stablecoins also under watch

This OTC proposal comes shortly after another big regulatory shift: stablecoin rules. In May, Hong Kong passed a law requiring stablecoin issuers to get licensed and prove they have enough reserves to back every coin they offer.

The stablecoin law officially kicks in on August 1. At least nine firms have already expressed interest in applying for licenses.

For now, access to licensed stablecoins will be limited to professional investors. Regulators want to make sure everything runs safely before letting the general public use them.

Aiming for balance

Hong Kong has made it clear that it wants to support crypto innovation — but without the chaos. By tightening rules and defining clear expectations, the government hopes to reduce the risk of scams without pushing developers and companies away.

More details about the new OTC licensing system are expected in the coming months, including how licenses will be issued and monitored. Authorities also expect to approve the first stablecoin licenses before the end of the year.

Hong Kong is betting that a clearer system will encourage responsible growth. Will it work — and will other regions follow?