The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) have set new requirements for crypto over-the-counter (OTC) derivatives. These requirements align with the European Securities and Markets Authority (ESMA) standards, including the use of Digital Token Identifiers (DTIs).

New Reporting Requirements

On September 26, the HKMA and SFC unveiled a plan to synchronize their OTC reporting requirements with ESMA’s standards. This decision follows a consultation process that began in March 2024. The mandatory use of DTIs for OTC derivatives reporting will commence on September 29, 2025.

Feedback from Stakeholders

This move comes after Hong Kong stakeholders suggested using DTIs to clearly identify crypto-asset underliers for OTC derivatives. Some investors found it challenging to categorize OTC derivatives within the traditional asset classes of interest rates, foreign exchange, credit, commodities, and equities.

Global Standards and Cross-Border Collaboration

The HKMA and SFC highlighted that ESMA had proposed and begun implementing DTI in reporting as of October 2023. Currently, DTI serves as a fundamental reference for crypto asset service providers across Europe.

“To support reporting entities in transitioning to UTI, they may continue to report the existing trade identifiers of Unique Swap Identifier (USI) and Unique Trade ID (TID) as per the current reporting requirements, or report the UTI voluntarily, until the implementation date.”

The regulators also indicated plans for cross-border collaboration with financial authorities from Singapore, Australia, and Japan. This coordinated approach aims to ensure a smooth adoption of UTI in Hong Kong and the broader Asia-Pacific (APAC) region.

Future Regulatory Developments

On September 12, it was reported that the Hong Kong Customs and Excise Department is considering partnering with the SFC to introduce new licensing regulations for OTC crypto services. Previously, the Customs and Excise Department was the sole regulator of OTC services. The SFC has been consulting with industry players to evaluate potential new regulations for cryptocurrency custodian services.

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