Hong Kong SFC and AFRC extend audit oversight to licensed crypto firms
Hong Kong's securities and accounting regulators have signed a new agreement bringing licensed virtual asset service providers under their joint financial reporting and audit cooperation.
Key points
- The SFC and AFRC signed a memorandum of understanding on Monday covering financial and compliance reporting.
- The agreement covers SFC-licensed virtual asset service providers, licensed corporations, registered open-ended fund companies and authorized funds.
- It establishes a framework for information sharing, case referrals, mutual assistance and coordinated inspections and investigations.
- The MoU replaces a 2021 agreement between the SFC and the Financial Reporting Council, renamed the AFRC in 2022.
- SFC Chair Kelvin Wong said the cooperation would provide more comprehensive oversight across a broader range of entities and activities.
Hong Kong's Securities and Futures Commission and the Accounting and Financial Reporting Council have expanded their oversight of licensed crypto firms under a new memorandum of understanding, CoinTelegraph reports. The agreement, announced on Monday, extends the two regulators' cooperation on financial reporting and audits to SFC-licensed virtual asset service providers.
The MoU covers financial and compliance reporting by licensed virtual asset service providers, licensed corporations, registered open-ended fund companies and authorized funds. It also takes in related audit and assurance work, according to the SFC. The framework sets out arrangements for information sharing, case referrals, mutual assistance and coordinated inspections and investigations.
The new agreement replaces a 2021 MoU signed by the SFC and the Financial Reporting Council, which was renamed the Accounting and Financial Reporting Council in 2022. The earlier deal did not extend the same reporting and audit cooperation to licensed virtual asset service providers.
Regulators widen joint oversight
SFC Chair Kelvin Wong said the expanded cooperation would provide more comprehensive oversight across a broader range of entities and activities in Hong Kong's financial sector. The SFC's statement framed the move as a widening of the regulators' joint remit rather than a change to the underlying rules.
The signing comes as Hong Kong continues to build out its digital asset regulatory framework. In January, regulators outlined plans for new rules covering crypto advisory services, and the SFC has also introduced frameworks for virtual asset margin financing and perpetual contracts.
The agreement gives the AFRC a formal role in scrutinising the reporting and audit work of licensed crypto businesses, which previously sat outside the pair's joint oversight arrangements. For firms holding SFC licences, it means their financial and compliance reporting now falls within the same cooperation framework as traditional licensed corporations and funds.
What the agreement covers
Hong Kong has positioned its licensing regime as a way to bring crypto platforms into mainstream supervision. The MoU adds an accounting and audit dimension to that effort, alongside the SFC's existing work on advisory services, margin financing and perpetual contracts.