Update: a digital-asset fund structured Singapore

Managers building digital-asset funds across the Hong Kong–Singapore corridor face a compounding regulatory question. Neither jurisdiction operates in isolation. The licensing posture adopted in one seat directly affects the permissible activity and investor reach of the structure as a whole.

A dual-jurisdiction digital-asset fund structure spanning Hong Kong and Singapore engages two distinct licensing regimes – the virtual-asset trading platform (VATP) regime under Hong Kong's Anti-Money Laundering and Counter-Terrorist Financing Ordinance, administered by the Securities and Futures Commission, and Singapore's regulated digital-payment and capital-markets licensing perimeter. Where the fund's investment activities touch assets that qualify as securities or futures contracts in either seat, the relevant securities regulator's authorisation requirements also apply. Managers who treat these as parallel compliance exercises rather than an integrated posture consistently underestimate the exposure.

This briefing covers what the current regulatory position means for fund structures straddling the corridor, who is most affected, and the immediate actions that matter.

What the regulatory position requires now

Hong Kong's mandatory licensing regime for centralised virtual-asset trading platforms commenced on 1 June 2023 under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The Securities and Futures Commission is the licensing authority. That is the floor for any platform-facing activity within the Hong Kong perimeter.

Beyond the trading-platform gateway, a fund structure that holds or deals in virtual assets meeting the definition of a "security" or "futures contract" also falls within the Securities and Futures Ordinance's perimeter. In practice, many digital-asset funds straddle both definitions depending on the underlying portfolio. Managers frequently discover that mid-way through a structuring exercise.

On the AML side, VATPs in Hong Kong are subject to full customer due-diligence requirements and the FATF travel rule (the requirement to transmit originator and beneficiary information on virtual-asset transfers above a threshold). That obligation attaches to the platform, not only to the fund manager. A structure that consolidates trading activity through a Hong Kong VATP must therefore map the AML obligations at both the fund and the platform layer before launch.

Singapore's regime adds a parallel perimeter. The Monetary Authority of Singapore administers its own licensing requirements for digital-payment token services and for capital-markets services where the assets in question are capital-markets products. A fund structured to run management or dealing activity from Singapore must satisfy both sets of requirements independently. There is no mutual recognition of licences between the two jurisdictions. That gap is the source of most of the structural complexity we see in cross-border digital-asset mandates.

For a practical read on how the Hong Kong perimeter operates at the platform level, see our guide to the virtual-asset trading platform licence in Hong Kong. For the broader Tech & Web3 practice context, including licensing, AML and entity structuring, see the Tech & Web3 practice page.

In our cross-border practice, the most common structural failure is a fund that has correctly addressed the licensing question in one seat and assumed the other follows by implication. It does not. Hong Kong and Singapore regulators each apply their own substance and conduct tests independently.

Who is affected and what to do immediately

The regulatory exposure is most acute for three categories of manager. First, funds that commenced structuring before the Hong Kong VATP regime commenced and have not revisited their entity and activity map since. Second, funds that changed their portfolio scope – moving, for example, into assets that may qualify as securities – without re-assessing the licensing perimeter. Third, structures that added a Singapore management or dealing entity as an operational convenience without formally mapping that entity's regulatory footprint under Singapore's own regime.

For context on how a comparable dual-jurisdiction structure has been handled in the Hong Kong–UAE corridor, see our related matter note on the Hong Kong–UAE configuration.

The immediate actions are sequential, not concurrent. Start with an activity map: for each entity in the structure, identify what activity it performs, in which jurisdiction, and against which assets. That map will determine which licensing gateway applies and in what order. Do not begin licensing applications in either seat until the activity map is settled. An application that mischaracterises the activity – even modestly – creates a disclosure problem that is harder to unwind than the original gap.

AML obligations should be addressed as part of the same exercise, not afterwards. The travel rule and customer due-diligence requirements apply from the first transaction. Building the compliance file after operations begin is the pattern we see most often when matters reach us for remediation.

The sequence above describes the standard position. Your structure turns on the specific entities, the assets they hold, the activities they perform, and the order of regulatory engagement – which is precisely where the exposure is won or lost.

For a structured assessment of your digital-asset fund structure across the Hong Kong and Singapore perimeters, write to us at info@lockhartyip.com.

Frequently asked questions

How long does a digital-asset fund structured through Hong Kong and Singapore usually take?

Timeline depends on the fund's specific activity map, the licensing pathways engaged in each seat, and the completeness of the AML and compliance documentation at the point of application. A structure that requires licensing under both the Hong Kong VATP regime and Singapore's capital-markets or digital-payment framework will run two parallel processes, each with its own regulatory timetable. Managers should treat these as multi-month exercises in each jurisdiction and sequence engagement accordingly. Parties should verify the current processing position with each regulator before acting.

What does the route look like for a digital-asset fund structured through Hong Kong and Singapore?

The route begins with an activity map across all entities and jurisdictions, then moves to identifying which licensing perimeter applies in each seat – VATP and/or securities in Hong Kong; digital-payment token and/or capital-markets services in Singapore. AML programme design runs in parallel. There is no cross-recognition between the two regimes, so each licensing process is self-contained. International counsel working alongside locally admitted firms in each jurisdiction can coordinate the sequencing and the regulatory correspondence across both seats.

What is the first step in a digital-asset fund structured through Hong Kong and Singapore?

The first step is a clear activity map: entity by entity, jurisdiction by jurisdiction, asset class by asset class. Until that map is settled, neither the licensing strategy nor the AML programme can be correctly scoped. Attempting to file in either seat before the activity map is complete is the most consistent source of delay and regulatory friction we see in this corridor. Once the map is confirmed, the licensing and compliance workstreams can be sequenced and allocated between the two jurisdictions.

Speak with Lockhart & Yip

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This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.

Update: a digital-asset fund structured through Hong Kong and Singapore

What the regulatory position requires now

Who is affected and what to do immediately

Frequently asked questions

Speak with Lockhart & Yip

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