The Accounting and Financial Reporting Council (AFRC) and Securities and Futures Commission (SFC) have signed a new memorandum of understanding (MoU) that significantly expands their joint regulatory efforts. According to the latest reports, the new MoU replaces the 2021 agreement between the SFC and the AFRC's predecessor, the Financial Reporting Council. The enhanced cooperation now extends beyond traditional financial reporting to include financial and compliance reporting carried out by licensed corporations, virtual asset service providers licensed by the SFC, SFC-authorised funds, and registered open-ended fund companies. AFRC CEO Janey Lai emphasized that "reliable financial reporting and auditing underpin market integrity and investor confidence," stating that the enhanced cooperation will enable regulators to identify emerging risks earlier and carry out statutory responsibilities more effectively.
Hong Kong's Securities and Futures Commission (SFC) and Accounting and Financial Reporting Council (AFRC) have officially brought crypto firms under traditional reporting frameworks. The framework requires SFC-licensed crypto firms to submit audited balance sheets, proof-of-reserves, and internal compliance reporting for strict auditing. As per the latest MoU, this comprehensive oversight now encompasses the audit and assurance functions performed by auditors responsible for these entities. The agreement establishes a structured framework for information sharing, case referrals, mutual assistance, and coordinated inspections where matters of shared regulatory concern arise.
Digital assets have become increasingly integrated into Hong Kong's mainstream financial system, with the city establishing a stablecoin licensing framework earlier this year. According to AMBCrypto, this regulatory clarity has attracted global players like Standard Chartered to support regulated Hong Kong dollar-denominated stablecoins for payments. Hong Kong has emerged as a top pioneer in tokenized bonds, offering nearly $4 billion in public sector and tokenized digital bonds since 2023 through blockchain technology. The latest MoU demonstrates how these traditional financial instruments are now integrated under the expanded regulatory framework.
The enhanced reporting requirements are part of broader regulatory measures aimed at addressing growing crypto adoption. As reported by AMBCrypto, authorities argue these stricter rules help curb anti-money laundering and tax evasion, enhancing law enforcement capabilities in investigating sector-related crimes. In March, Hong Kong expanded police powers to access encrypted devices, raising privacy concerns for crypto users, while the latest reporting rules continue this trend of enhanced regulatory oversight. SFC CEO Julia Leung noted that this MoU "strengthens regulatory backing for our collaboration with the AFRC, ensuring our supervision evolves with market dynamics," emphasizing that deepening regulatory cooperation across financial sub-sectors is essential to upholding financial reporting quality.
Hong Kong's aggressive crypto regulatory approach reflects its position as a top country in crypto adoption across the APAC region as of 2025. According to AMBCrypto, this regulatory evolution has attracted international attention, with Pakistan recently seeking technical and regulatory expertise from Hong Kong to develop similar tokenized bond services. The comprehensive framework demonstrates Hong Kong's commitment to maintaining its position as a global financial hub while ensuring robust regulatory oversight in the evolving digital asset sector. The latest MoU reinforces Hong Kong's leadership in establishing structured regulatory cooperation models that can serve as templates for other jurisdictions.
