Hong Kong Regulators Extend Reporting Oversight Cooperation to Crypto Firms

Hong Kong’s securities and accounting regulators have expanded their cooperation on financial reporting and audits to include licensed crypto firms.

The Securities and Futures Commission (SFC) and the Accounting and Financial Reporting Council (AFRC) signed a new memorandum of understanding on September 28. It covers financial and compliance reporting by SFC-licensed virtual asset service providers, as well as licensed corporations, authorized funds, and registered open-ended fund companies. Related audit and assurance work is also covered.

The agreement sets out how the regulators will share information, refer cases, and assist one another. They may also coordinate inspections or investigations where a significant matter falls within both agencies’ responsibilities.

The published memorandum of understanding says the regulators will refer matters to each other when they fall within the other agency’s remit. The AFRC will also notify the SFC about certain investigations involving licensed virtual asset service providers and consult it before seeking documents or explanations from them.

AFRC chief executive Janey Lai said,

The enhanced cooperation and information sharing between the AFRC and the SFC will enable us to identify emerging risks earlier and carry out our statutory responsibilities to respond more effectively.

The agreement replaces a 2021 memorandum of understanding that focused on listed entities’ financial reporting and their auditors.

The change does not modify existing laws or regulations and only concerns regulatory coordination.