What is a VATP license in Hong Kong? It is the license the Hong Kong Securities and Futures Commission (SFC) grants to virtual asset trading platforms. Since June 1, 2023, anyone operating a centralized virtual asset trading platform in Hong Kong, or actively marketing such services to Hong Kong investors, must hold an SFC license. It is Hong Kong’s first licensing regime designed specifically for virtual asset service providers.
How Is a VATP License Granted?
The VATP regime uses a “dual licensing” approach. Trading in non-security tokens is regulated under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, while trading in security tokens is regulated under the Securities and Futures Ordinance. Because whether a token counts as a security can change over time, platforms usually apply for both licenses at once. The regime came with transitional arrangements: platforms already operating in Hong Kong could apply and keep running during the transition period, and once it ended, platforms that were neither approved nor deemed licensed had to cease their Hong Kong business. Licensed platforms can serve retail investors once they meet requirements such as suitability assessments and token admission criteria.
What Does a VATP License Require for Custody and Wallets?
The SFC requires client assets to be held on trust by a wholly owned subsidiary of the platform, with at least 98% kept in cold storage, and its specific expectations on key management and compensation arrangements are laid out in its robust custody standards.
What Other Virtual Asset Licenses Does Hong Kong Have Beyond VATP?
The VATP license covers only trading platforms. For OTC dealing and standalone virtual asset custody services, Hong Kong has completed public consultations on licensing regimes and is moving ahead with legislation, while stablecoin issuance is licensed separately by the HKMA. Firms in the OTC or custody business should prepare early by aligning client asset segregation, key management and AML processes, including KYT and the Travel Rule, with the standards applied to licensed trading platforms.
Conclusion
Hong Kong’s VATP license is granted by the SFC to virtual asset trading platforms. In force since June 1, 2023, it uses a dual licensing approach and requires client assets to be held on trust with at least 98% in cold storage. Licensing regimes for dealing and custody services are still going through legislation. Safeheron’s MPC Wallet-as-a-Service provides businesses with MPC key management and a policy engine.
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