The financial authorities of Hong Kong have established requirements for cryptocurrency over-the-counter derivatives in line with the standards set by the European Securities and Markets Authority, which includes the implementation of Digital Token Identifiers.
On September 26, the Hong Kong Monetary Authority and the Securities and Futures Commission unveiled a proposal aimed at aligning their OTC reporting standards with those of ESMA, following an examination of feedback received from a consultation paper issued in March 2024.
According to the HKMA and SFC, the mandatory implementation of Digital Token Identifiers for CTO derivatives reporting is scheduled to commence on September 29, 2025.
This decision was influenced by suggestions from various stakeholders in Hong Kong, who urged the use of DTIs “to clearly identify crypto-asset underliers for OTC derivatives.”
Stakeholders and investors in Hong Kong have expressed concerns regarding the difficulty of categorizing OTC derivatives within the five conventional asset classes: interest rates, foreign exchange, credit, commodities, and equities.
In response, Hong Kong regulators decided to introduce reporting requirements to facilitate the adoption of DTI.
In their announcement, the HKMA and SFC noted that ESMA proposed and began integrating DTI in reporting as early as October 2023. Additionally, DTI is currently the primary reference point for crypto asset service providers throughout Europe.
“To assist reporting entities in the transition to UTI, they may continue to utilize the existing trade identifiers of Unique Swap Identifier (USI) and Unique Trade ID (TID) as stipulated by the current reporting standards, or voluntarily report the UTI until the designated implementation date.”
The announcement also alludes to cross-border cooperation with financial regulators from Singapore, Australia, and Japan “to establish a coordinated implementation strategy for UTI in the Asia-Pacific
(APAC) region, ensuring a seamless adoption of UTI in Hong Kong.”
On September 12, the South China Morning Post reported that the Hong Kong Customs and Excise Department is contemplating collaboration with the local Securities and Futures Commission to explore new licensing regulations for OTC crypto services.
Prior to this collaboration, the C&ED was solely responsible for regulating OTC services, while the SFC has been engaging with industry participants regarding the potential new framework and assessing regulations concerning cryptocurrency custodian services.
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