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- Hong Kong regulators expanded their cooperation to cover financial reporting and audits at licensed crypto businesses.
- The SFC and AFRC signed a Sept. 28 memorandum of understanding to coordinate inspections, investigations and information sharing.
- Existing filing rules remain unchanged while reporting failures and audit deficiencies can be referred between the regulators.
Hong Kong’s Securities and Futures Commission and Accounting and Financial Reporting Council have expanded their regulatory cooperation to cover financial reporting and audits at licensed crypto businesses.
The two regulators signed a new memorandum of understanding on Sept. 28 covering SFC-licensed virtual asset service providers, alongside licensed corporations, authorized funds and registered open-ended fund companies. The agreement also covers audit and assurance work performed for those firms.
SFC and AFRC Can Coordinate Inspections and Investigations
The agreement creates a framework for the SFC and AFRC to share information, refer cases, provide regulatory assistance and coordinate inspections and investigations where their responsibilities overlap.
The arrangement gives the two regulators a clearer framework for coordinating on financial statements, compliance reports and auditor conduct involving licensed crypto firms.
AFRC CEO Janey Lai said closer information sharing should help the regulators identify risks earlier and respond through their existing statutory powers. The agreement replaces a 2021 memorandum between the SFC and the Financial Reporting Council, which was renamed the AFRC in 2022.
Existing Annual and Monthly Filing Rules Stay in Place
The memorandum does not introduce a new standalone financial reporting deadline for licensed crypto firms.
Hong Kong’s existing rules already require licensed virtual asset trading platform operators and associated entities to submit audited accounts and specified documents within four months after the end of each financial year.
Platform operators must also submit monthly financial resources returns to the SFC. The new agreement changes how regulators coordinate oversight of those obligations rather than replacing them.
Sept. 28 Agreement Extends Oversight Beyond Licensing
Hong Kong also requires independent accounting firms involved in parts of the virtual asset licensing process to meet applicable regulatory and assurance standards.
The Sept. 28 agreement extends that coordination beyond the licensing stage, giving the SFC and AFRC a clearer mechanism for handling reporting or audit concerns involving licensed crypto firms.
For platforms and their auditors, the immediate change is closer coordination between the two watchdogs. Existing filing requirements remain in place, while reporting failures or audit deficiencies can be referred more directly between the regulators responsible for supervising each side.
