Building Trust Through Compliance

Hong Kong’s regulators, notably the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), have taken a proactive approach. Their collaborative efforts have resulted in clear roadmaps and transparent licensing regimes that aim to protect consumers while encouraging responsible innovation. For example, the Legislative Council passed the Stablecoins Bill on 21 May 2025 to foster financial stability and encourage financial innovation.

Technology as a compliance enabler

Advanced technologies like Artificial intelligence (AI), machine learning, and blockchain analytics are now integral to modern compliance strategies. Crypto firms and Virtual Asset Service Providers (VASPs) in Hong Kong are leveraging these tools for:

This is where orchestration platforms quietly transform operations. By integrating multiple data sources and compliance tools into a unified workflow, crypto firms can streamline onboarding, automate risk assessments, and respond to regulatory changes with agility, allowing them to:

By automating essential compliance and fraud checks through a unified platform, operators can access global data and verification tools seamlessly. This approach supports tailored onboarding and monitoring workflows without the need for extensive coding, helping firms improve conversion rates, reduce financial crime risk, and maintain regulatory alignment. 

For example, Crypto.com proactively detects and prevents fraud by leveraging LexisNexis® ThreatMetrix® and real-time digital identity and behavioral intelligence from one of the world’s largest cross-industry data networks. This enables risk-based decisioning that helps stop fraudulent activities before they impact the platform, reducing account takeovers, new account fraud and chargebacks. ThreatMetrix® also supports Crypto.com in minimizing false positives, improving customer experience and conversion rates, and achieving a 26% lift in fraud capture rates. Operational efficiencies, including a 20% reduction in time spent on manual reviews, contribute to strong ROI with a positive return on investment realized within the first six months and scalable fraud prevention to support Crypto.com’s global growth.

Challenges in building a unified framework

Despite progress, several challenges remain:

• Travel Rule Compliance: Ensuring consistent standards across jurisdictions is complex. Licensed entities in Hong Kong often face difficulties when counterparties in other regions operate under looser compliance norms.
• Reliance on Third-Party Vendors: Crypto exchanges depend heavily on blockchain analytics providers, which can introduce risks if data is inaccurate or delayed.
• New Account Fraud: Cryptocurrencies are rooted in anonymity, meaning VASPs often collect limited customer information. This creates significant challenges for performing effective KYC and due diligence during onboarding. The lack of transparency also makes the ecosystem more vulnerable to fraud, scams, and illicit activity. 

Hong Kong’s unique position

Unlike jurisdictions that regulate through enforcement, Hong Kong has opted for a consultative and transparent approach. The SFC’s licensing regime is stringent but fair, offering clear guidance and support to applicants. This has positioned Hong Kong as a pioneer in regulated crypto exchanges, with robust customer protection measures such as mandatory cold storage and insurance coverage.

The upcoming stablecoin regulations and potential expansion into derivatives and margin trading signal a maturing market. Hong Kong is not just regulating crypto – it is shaping its future.

Looking Ahead: The Future of Crypto Compliance

The future of crypto compliance in Hong Kong and beyond will be shaped by: