Hong Kong regulators extend financial reporting oversight to licensed cryptocurrency firms.

On Monday, Hong Kong's Securities and Futures Commission (SFC) and the Accounting and Financial Reporting Council (AFRC) said a new MoU extends financial reporting and compliance cooperation to SFC-licensed digital asset businesses.

What's this about?

The MoU covers SFC-licensed virtual asset providers, licensed companies, registered open-end funds and authorized funds. According to the SFC, the agreement also covers auditing and related assurance work and establishes a framework for information sharing, case reporting, mutual assistance including joint supervision and investigation.2021

The agreement replaces the 20032021 MoU that SFC signed with the Financial Reporting Council, which was renamed AFRC in 2004.2022

Why is that important?

For crypto businesses, having a license alone may not be enough to build trust because financial reporting and auditing are the databases that regulators use to assess whether companies operate in accordance with standards.

The expanded cooperation between the SFC and AFRC means that accounting and compliance issues of digital asset businesses can be monitored more directly across agencies, rather than each agency working in isolation.

What's the impact on licensed businesses?

Businesses covered by the MoU face more interconnected regulatory standards between securities market and accounting authorities, data sharing and reporting means that if a financial reporting or audit remark is found, agencies may coordinate to conduct joint inspections or investigations.

According to SFC, Kelvin Wong, Chairman of the SFC noted that this MoU helps create a more inclusive regulatory framework in terms of individuals and diversifying activities of Hong Kong's financial sector.

Hong Kong's cryptocurrency laws.

This is not Hong Kong's first move in the digital asset space. In January, regulators announced a new set of regulations covering crypto-advisory services while the SFC introduced a framework for virtual asset margin financing and perpetual contracts

A related news report noted that Hong Kong jailed a former banker in the value-forfeiture case1.6 for US$1 billion and bribes amounting to cryptocurrency .

For Thai and Burmese readers

For readers in Thailand, the move is not a rule that applies directly to Thai platforms but rather an expansion of the accounting and financial reporting regulatory framework for licensed digital asset businesses. In Thailand, The Securities and Exchange Commission Regulatory Office or the SEC (Thailand) has regulated digital asset business operators while Bitkub is a local platform, and many transactions with virtual currencies are priced in baht (888000).

For readers in Myanmar who may access the market through transnational platforms or external providers, Hong Kong's stricter auditing and reporting standards may reflect a trend of global operators requiring more accounting disclosures but does not directly change local regulations.

What's to follow?

To monitor how the SFC and AFRC will use a shared data sharing and audit framework, particularly where there are doubts about the financial reporting of licensed digital asset businesses, including how advisory services regulations, leverage ratios and perpetual contracts will be enforced and audited in practice.