Token offerings are at the heart of crypto innovation, but they also come with unique challenges—especially in a market as tightly regulated as Hong Kong. With regulators stepping up their game, understanding the rules isn’t just optional; it’s critical to your success.

If you’re planning a token offering in Hong Kong, here’s what you need to know to stay compliant and ahead of the curve.

The Top Risks in Hong Kong’s Token Landscape

  1. Securities Classification
    Did you know? If your token is deemed a “security” under Hong Kong’s Securities and Futures Ordinance (SFO), you’ll need to comply with stringent requirements. Missteps here can lead to fines or even legal shutdowns.
  2. Licensing is Non-Negotiable
    Operating a crypto exchange or facilitating token sales? The SFC’s licensing is mandatory. Recent approvals for four more trading platforms show Hong Kong is serious about regulating this space.
  3. AML and KYC Compliance
    The law requires robust systems to prevent money laundering and fraud. A lapse in your AML/KYC framework could tarnish your reputation and land you in legal trouble.
  4. Tax Considerations
    Utility token income sourced in Hong Kong is taxable, but profits from security tokens may be exempt. Are you prepared for these nuances in your tax strategy?

How to Stay Ahead of Regulatory Challenges

  • Start with Legal Guidance: Early legal consultation ensures your token is structured and marketed in compliance with local laws.
  • Embrace Global and Local Rules: For cross-border token offerings, align your strategy with global and Hong Kong-specific regulations.
  • Develop an Internal Compliance Framework: Build robust systems for AML/KYC, securities compliance, and tax management.

TITUS is one of the very few law firms in Hong Kong with deep expertise in the crypto sector. We’ve successfully guided major crypto projects, helping them navigate complex regulatory challenges while staying focused on growth.

Planning a token offering? Struggling with compliance? Share your thoughts in the comments or connect with us directly to see how we can help.

CONTACT US

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EMAIL: info@titus.com.hk
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WEBSITE: www.titus.com.hk