Hong Kong to implement European standards for crypto OTC derivatives reporting

Regulators in Hong Kong have decided to adopt European standards for reporting over-the-counter (OTC) crypto derivatives transactions by 2025 to align with global standards.

On September 26, the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) announced plans to implement reporting requirements modeled after those of the European Securities and Markets Authority (ESMA).

The decision follows feedback from a consultation paper issued by the regulator in March 2024, where stakeholders recommended upgrading the current framework for OTC crypto derivatives.

The new rules will include using Digital Token Identifiers (DTIs) to identify crypto assets in OTC derivatives reporting.

DTIs, already in use across Europe since October 2023, serve as a standard reference for crypto-asset service providers.

According to the regulators, Hong Kong will accommodate DTIs in its reporting requirements, referring to the identifier in the “Underlier ID” data field as part of the new framework.

While the adoption of DTIs is a key focus, the authorities will continue to monitor similar mandates in other jurisdictions to adjust their approach if necessary.

Additionally, the release hints at collaboration with financial regulators from Singapore, Australia, and Japan to coordinate the adoption of the Unique Transaction Identifier (UTI) across the Asia-Pacific (APAC) region.

The new rules are expected to be finalized by Sept. 29, 2025, ensuring that Hong Kong’s reporting standards align with international practices.

Regulating the Hong Kong crypto market

In the meantime, the SFC is also seeking feedback from industry participants on a potential regulatory framework for the crypto OTC trading market. 

This proposal aims to introduce a licensing system for companies offering OTC crypto services in collaboration with Hong Kong’s Customs and Excise Department.

Under this system, licensed firms could conduct private crypto transactions away from public exchanges, offering greater privacy to traders.

These developments align with Hong Kong’s broader goal of becoming a global hub for cryptocurrencies and other emerging technologies.

The region has been focused on strengthening its regulatory framework to attract investors and businesses in the digital assets sector.

In June 2024, Hong Kong introduced a licensing regime for virtual asset service providers (VASPs), which required crypto exchanges to obtain licenses by the end of the non-contravention period on June 1, 2024.

HashKey and OSL became the first set to exchanges under the licensing scheme and were allowed to offer services to both institutional and retail investors.

Initially, retail traders were limited to trading Bitcoin and Ethereum. However, HashKey has since expanded its offerings to include Chainlink’s LINK and Avalanche’s AVAX tokens.

Besides focusing on crypto regulation, Hong Kong’s Financial Services and Treasury Bureau (FSTB) is developing a framework for the ethical use of artificial intelligence (AI) across financial markets, including banking, trading, and cryptocurrency. 

The FSTB said it was closely monitoring international AI developments and intends to release a policy statement outlining its approach later this year, as geopolitical tensions between the United States and China have led to companies like OpenAI and Google’s Gemini restricting their services in Hong Kong.

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