Hong Kong widens reporting oversight for licensed crypto firms

The Securities and Futures Commission and the Accounting and Financial Reporting Council expanded their memorandum of understanding on Monday in Hong Kong to cover financial and compliance reporting, audits and information sharing for firms licensed by the SFC, including virtual asset service providers, licensed corporations, registered open-ended fund companies and authorized funds.

The revised MoU replaces a 2021 agreement signed with the former Financial Reporting Council, renamed the AFRC in 2022. It sets out a framework for sharing information, referring cases, providing mutual assistance and conducting coordinated inspections and investigations between the two regulators.

Kelvin Wong, chair of the SFC, described the enlarged cooperation as providing “more comprehensive oversight” across a broader range of entities and activities in Hong Kong’s financial sector.

The announcement comes as Hong Kong continues to expand its digital asset regulatory framework. Earlier in the year authorities published plans for new rules on crypto advisory services, and the SFC introduced frameworks for virtual asset margin financing and perpetual contracts.

Including audit and assurance work brings accountancy oversight closer to securities regulation when assessing the financial reporting and compliance of licensed crypto firms. The information-sharing and coordinated inspection provisions aim to help the two bodies respond to potential breaches, share evidence and streamline cross-agency inquiries.

The AFRC is responsible for monitoring auditors and the quality of financial reporting. The SFC oversees securities, futures and virtual asset providers under its licensing regime. The expanded formal cooperation aligns reporting oversight with the regulatory scrutiny applied to licensed virtual asset service providers and fund structures operating in Hong Kong.