Experiencing Hong Kong’s New Virtual Asset Trading Rules Before and After June 1

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On June 1, 2025, Hong Kong’s updated virtual asset trading regulations officially took effect, marking a pivotal shift in how retail investors interact with digital currencies. The new rules, outlined in the Guidelines for Virtual Asset Trading Platform Operators, introduced mandatory real-name authentication and stricter operational controls across licensed platforms. To understand the real-world impact of these changes, a firsthand comparison was conducted at a Hong Kong-based digital asset exchange—both before and after the policy rollout.

Pre-June 1: A Seamless but Unregulated Experience

On May 31, just hours before the new regulations kicked in, the physical trading center in Yau Ma Tei resembled more of a futuristic bank than a crypto hub. The first floor featured consultation desks, service counters, and 24-hour cryptocurrency ATMs—offering services like buying, selling, redeeming crypto, and even withdrawing cash.

The atmosphere was calm but active. Among the visitors were 10 mainland tourists and five local Hong Kong residents, mostly middle-aged individuals curious about digital assets. One elderly man observed quietly from the side, while others engaged with staff or operated the machines.

For first-time users like this reporter—who had never used a blockchain wallet—the process began with downloading the exchange’s app and creating an account. At that time, no identity verification was required for small transactions. Using the ATM, I inserted 100 HKD to purchase Bitcoin (BTC). After scanning a QR code generated in the app, the transaction completed in under three minutes. No facial recognition or ID upload was needed.

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The ATM supported multiple cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), and Tether (USDT), with options to buy in denominations of 100, 500, or 1,000 HKD. Transactions ranged from 100 to 1 million HKD, offering flexibility for both casual users and high-volume traders.

Post-June 1: Real-Name Verification and New Restrictions

By June 1, the scene had changed dramatically. Despite heavy rain, investors—mostly from mainland China—gathered outside before opening time, some even taking photos with the exchange signboard like tourists at a landmark.

Inside, new requirements were immediately apparent. A notice贴 on the ATM stated: “For use by registered Hong Kong Digital Asset Exchange customers only.” More significantly, every transaction now required facial authentication and a photo of the user holding their ID document. This confirmed that real-name trading was now enforced—a core component of Hong Kong’s regulatory framework.

Transaction limits were also reduced. While previously users could trade up to 1 million HKD via ATM, the new cap stood at 100,000 HKD. More frustratingly, when attempting to sell the BTC purchased the day before (worth ~0.0004 BTC), the system rejected the request: “The amount cannot be processed.”

A seasoned trader nearby explained: “You need at least 0.001 BTC to sell.” Since 100 HKD only bought a fraction of that, I was locked in—unable to liquidate my holdings.

Navigating Hidden Fees and Complex Workarounds

With no clear guidance from staff or on-screen prompts, resolving this issue required help from experienced users. One suggested converting BTC into Tether (USDT)—a stablecoin with better exchange rates—and combining it with additional funds to meet the minimum withdrawal threshold.

Following this advice, I used 500 HKD to buy USDT via the ATM (after completing identity checks), then transferred my BTC to USDT within the app. When withdrawing, another surprise emerged: the platform charged a flat fee of 1 USDT, meaning I had to input 67.752470 USDT instead of the displayed 66.752470 to receive the full amount.

After all steps were completed, I received only 500 HKD back from an initial investment of 600 HKD—a 16.7% loss due to exchange spreads and fees. For comparison, most bank interbank transfer fees are below 1%.

This complexity highlights a major barrier for newcomers: without prior knowledge or assistance, understanding fee structures, conversion processes, and minimum thresholds can be overwhelming.

Are Physical Crypto ATMs Just Marketing Gimmicks?

Some investors question whether offline ATMs serve any practical purpose beyond publicity.

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One blockchain developer noted: “The buy-sell spread for USDT is around 6%—7.96 HKD to buy, 7.49 HKD to sell. That’s extremely costly compared to online exchanges.” He views such ATMs as advertising tools, not viable trading channels.

Others appreciate the tangible experience. “Being able to withdraw physical cash feels like magic,” said one user. Another chose the location for a 2 million HKD transaction, citing face-to-face interaction as safer for large trades.

Yet concerns remain. A real estate investor who initially visited for “fun” later shared an article titled “Beware of Hong Kong Digital Asset Exchange—Extremely High Risk.” Another described the experience as “like a convenience store—no guidance, no support.”

Balancing Regulation and Decentralization

The introduction of mandatory ID checks raises philosophical questions about crypto’s original ethos: decentralization.

“I understand regulation is necessary,” said one trader, “but isn’t anonymity part of what makes crypto special?” He worries that increasing oversight may dilute the technology’s core values.

Still, many agree that real-name verification improves security and legitimacy, especially for retail investors unfamiliar with digital wallets and private keys.

Hong Kong’s Securities and Futures Commission (SFC) has emphasized ongoing investor education through partnerships with financial literacy councils. But as this experience shows, there remains a steep learning curve—even for tech-savvy users.

Frequently Asked Questions (FAQ)

Q: What changed for crypto trading in Hong Kong after June 1, 2025?
A: As of June 1, all retail investors must complete real-name verification—including facial recognition and ID submission—before buying or selling digital assets on licensed platforms. Transaction limits were also lowered, and only registered users can access ATM services.

Q: Can tourists or mainland visitors still trade crypto in Hong Kong?
A: Yes, but only through licensed platforms that comply with SFC regulations. While some unlicensed exchanges operate during a transitional period (until June 2026), they may impose restrictions or higher risks.

Q: Why couldn’t you sell your Bitcoin after purchasing it?
A: The platform requires a minimum balance of 0.001 BTC to initiate a sale. Since 100 HKD only bought ~0.0004 BTC, the amount fell below the threshold—a rule not clearly communicated during purchase.

Q: Are crypto ATMs worth using in Hong Kong?
A: For small transactions or first-time experiences, they offer convenience and tangibility. However, high fees, wide spreads, and unclear rules make them less ideal than regulated online platforms for regular trading.

Q: How do fees compare between offline ATMs and online exchanges?
A: Offline ATMs often charge 5–10% in total costs (including spreads and flat fees), while reputable online platforms typically charge under 1% per trade, making them far more cost-effective.

Q: Is Hong Kong’s crypto regulation safe for beginners?
A: Yes—the new framework enhances investor protection through licensing, transparency requirements, and mandatory custody solutions. However, users should still educate themselves on risks and choose compliant platforms carefully.

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