Hong Kong SFC Proposes Restricted-Title Rules Covering Crypto Exchange Names

Hong Kong's Securities and Futures Commission (SFC) proposed on Friday, Nov. 6, a faster process for updating restricted business titles, extending naming rules to crypto and virtual-asset trading terms under amendments to two ordinances. The restrictions would take effect six months after a bill passes the Legislative Council.

The regulator published consultation conclusions that finalize planned amendments to the Securities and Futures Ordinance (SFO) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). The SFC will complete the amendments, then introduce a bill to the Legislative Council. The rules are not yet in force.

The names at issue are those that could give a false impression of regulatory status, or imply a connection with established exchanges, clearing houses, virtual asset trading platforms and similar operations. The restrictions would apply to any person using or taking a specified title without SFC authority or a reasonable excuse. They are not confined to companies seeking approval.

Which names would be restricted?

A restricted title could combine "crypto," "digital asset," "token" or "virtual asset" with terms such as "exchange," "market," "clearing house" or "trading platform." Close variations would also fall within scope.

The individual words alone would not trigger the restriction. The proposal targets the combinations, which narrows enforcement to names that imply regulated market infrastructure rather than any virtual-asset business.

How would the two ordinances interact?

The SFO changes would extend existing naming rules that cover financial products and clearing operations. The AMLO provision would apply to virtual asset trading platforms and assets that may be traded or cleared through those platforms.

Where a name falls within both ordinances, an applicant could file one application rather than two. That single-window approach reduces administrative duplication for firms whose names touch both securities and virtual-asset regimes.

What did respondents ask for?

All nine consultation respondents supported expanding the restrictions, according to the Nov. 6 conclusions. Two requested a more flexible way to update the list of restricted titles.

The SFC addressed that concern by planning to place restricted titles in schedules to both ordinances, allowing changes through subsidiary legislation. That procedure moves faster than seeking a full amendment bill each time the list changes.

The commission rejected circulars or guidance as an update method. Unauthorized use of a restricted title is a criminal offense, so the SFC judged that changes to the list require the firmer legal basis of subsidiary legislation.

Where does enforcement stop?

The proposed restrictions would also cover names implying a link to operators based outside Hong Kong. The SFC can effectively restrict titles only for persons operating in Hong Kong or maintaining a physical presence there, which limits its enforcement reach beyond the territory.

That jurisdictional boundary leaves offshore platforms using Hong Kong-suggestive names outside direct scope, unless they hold a local presence the regulator can reach.

The SFC's next steps are fixed: finalize the amendments, introduce the bill, and start the six-month clock upon enactment.