Hong Kong Tightens Noose on Licensed Crypto Firms with Enhanced Oversight

Regulators in Hong Kong have strengthened financial reporting and audit checks for licensed crypto firms. The Securities and Futures Commission (SFC) and the Accounting and Financial Reporting Council (AFRC) signed a new Memorandum of Understanding (MoU) to enhance joint supervision.

The MoU replaces the 2021 agreement and requires licensed crypto firms to subject their financial records, including corporate balance sheets, proof-of-reserves, and client-asset custody logs, to third-party assurance work.

Auditors will also come under scrutiny, with regulators able to examine reporting issues and share information in real-time. This move aims to spot potential problems earlier and reduce the risk of major exchange failures.