Hong Kong Expands Crypto Oversight to Audits and Financial Reporting
A reporting problem at a Hong Kong-licensed crypto platform may no longer remain solely a matter for the regulator supervising the exchange.
Summary:
- Licensed virtual asset providers are explicitly included in the expanded SFC-AFRC framework.
- The agreement covers financial and compliance reporting as well as related audit and assurance work.
- The regulators can exchange information, refer cases and cooperate on inspections and investigations.
- Crypto companies join licensed corporations, authorised funds and registered open-ended fund companies under the broader arrangement.
Hong Kong’s Securities and Futures Commission (SFC) and Accounting and Financial Reporting Council (AFRC) signed an expanded Memorandum of Understanding on September 28. The agreement brings SFC-licensed virtual asset service providers into a cooperation framework covering financial and compliance reporting, audits and assurance work.
The MoU does not introduce new accounting standards for crypto companies. It changes how the two authorities can work together when a problem at a regulated business also raises questions about the accounting or audit work behind its reports.
One Reporting Problem Can Cross Regulatory Boundaries
Consider a licensed crypto platform whose financial reporting contains a material discrepancy.
The SFC could examine whether the company complied with requirements applying to the regulated business. Separately, the underlying issue could raise questions about how the relevant accounts were audited or what assurance work was performed.
That is where the AFRC’s responsibilities can become relevant.
Under the expanded MoU, the authorities have mechanisms for information exchange, case referrals, mutual assistance and coordinated inspections and investigations where their respective mandates overlap.
The responsibilities remain separate. The platform is responsible for its reporting and regulatory obligations, while an auditor has its own professional obligations. A concern identified by one regulator also does not automatically trigger action by the other.
What changes is the route between them.
Crypto Joins a Broader Audit and Reporting Framework
The scope of the agreement is wider than virtual assets.
It also encompasses licensed corporations, SFC-authorised funds and registered open-ended fund companies, along with related audit and assurance work.
For crypto companies, that positioning is significant. Hong Kong has not created a separate audit-supervision structure specifically for digital assets. Licensed virtual asset businesses are instead being incorporated into a framework that also applies to conventional regulated financial entities.
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The September agreement builds on an earlier arrangement between the SFC and the former Financial Reporting Council. The regulators’ previous cooperation was more closely associated with listed-entity financial reporting and audit matters; the new framework broadens that relationship across additional parts of the SFC-regulated market.
That also puts external auditors closer to the regulatory process surrounding licensed crypto businesses. Their role remains distinct from the SFC’s supervision of the platform, but audit work can now sit within the same inter-agency cooperation framework when a matter crosses both authorities’ responsibilities.
Information Sharing May Matter Before Enforcement
The MoU is not limited to investigations after misconduct has already been established.
AFRC CEO Janey Lai said the enhanced information-sharing arrangements would help the regulators identify emerging risks earlier, while SFC CEO Julia Leung pointed to closer cooperation as financial markets and regulatory challenges evolve.
For licensed virtual asset businesses, that puts greater weight on consistency across financial statements, compliance reports and the evidence supporting external assurance.
It also gives auditors a clearer place in Hong Kong’s developing crypto regulatory structure. Licensing governs whether a platform can operate, but financial reporting creates records that can subsequently be examined from both a market-supervision and an audit-quality perspective.
The First Crypto Case Will Show How Far the MoU Reaches
The agreement establishes the cooperation mechanism, but it does not predetermine how individual cases will be handled.
The SFC’s announcement does not identify a virtual asset platform facing a joint SFC-AFRC investigation under the expanded arrangement. Nor does the MoU mean that every reporting error will involve both regulators.
Its practical significance will become clearer when a real case tests the boundary: what information is shared, when an accounting or audit issue becomes relevant to SFC supervision, and when a problem discovered at a licensed crypto platform warrants AFRC involvement.
For Hong Kong’s crypto sector, that is the concrete change to watch. The regulatory perimeter around a licensed platform now reaches beyond its licence and operating controls into the financial reporting and professional assurance surrounding the business.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Zdravkov
Reporter at CoinsPress
Alexander Zdravkov is a market analyst and crypto journalist with interests in economics, broader financial markets and digital assets. His journey into crypto began more than four years ago, driven by a fascination with the rapid evolution of blockchain technology and the transformative potential of decentralized finance. He began analyzing market cycles and identifying emerging trends before they reach the mainstream. He holds a degree in International Relations - a background that helped shape his broader perspective on global economics, geopolitics, and the interconnected nature of modern financial markets. Whether covering the latest developments in the crypto sector or exploring broader macroeconomic themes, Alexander focuses on giving readers context rather than simply repeating headlines. During his career, he has authored more than 10,000 articles covering cryptocurrencies, traditional finance, and global market developments. His work spans everything from Bitcoin and altcoins to macroeconomic trends influencing risk assets worldwide.
