The Hong Kong Securities & Futures Professionals Association (HKSFPA) has asked regulators to soften several proposed elements of the OECD’s Crypto-Asset Reporting Framework (CARF) to avoid imposing an outsized operational burden on crypto firms. The association said it supports CARF’s tax-transparency objective but wants changes to record-keeping, penalties, and filing mechanics to make compliance workable in practice.
These recommendations were submitted during a public consultation that opened on December 9, 2025 and is scheduled to conclude on February 6, 2026, with legislative amendments expected later in 2026 ahead of Hong Kong’s planned participation in CARF data exchanges in 2028. The timeline effectively sets a near-term design window that will shape multi-year compliance buildouts across the local crypto sector.
Where the Industry Wants CARF Calibrated
HKSFPA broadly endorsed CARF’s direction on mandatory registration and cross-border reporting, while arguing implementation should be proportional to business scale and operational reality. The group positioned its feedback as pragmatic tuning intended to preserve Hong Kong’s competitiveness as a crypto hub while meeting international obligations.
On record-keeping, the association accepted a six-year retention period but opposed proposals that could extend personal liability to former directors or officers after a company dissolves. HKSFPA recommended using independent third-party custodians to maintain archives without creating open-ended exposure post-dissolution.
For RCASPs, HKSFPA proposed a “lite registration” path or a simplified annual declaration for entities with no reportable activity, including “nil returns.” The aim is to reduce administrative drag for low-activity operators without weakening the framework’s reporting intent.
On penalties, the group asked for administrative caps and a clearly defined “reasonable excuse” defense, warning that per-account fine structures could generate disproportionate liabilities from software errors. The association’s message is that penalty design should differentiate between operational mistakes and misconduct to avoid destabilizing compliance outcomes.
For filing systems, industry participants urged the government to support API and XML submission options alongside manual uploads to handle high transaction volumes and reduce error rates. They also requested technical specifications and a testing environment so firms can implement reporting pipelines with predictable quality controls.
HKSFPA further sought legal clarity on collecting certain non-reportable data and asked for longer filing deadlines, citing constraints linked to personal-data rules and the logistical strain of a proposed five-month timetable. The association’s position is that timeline realism and data-handling clarity are prerequisites for defensible compliance execution.
What Happens Next and Why It Matters
Hong Kong will weigh consultation feedback through early February 2026, with legislative amendments expected in 2026, automatic CARF exchanges set to begin in 2028, and a broader CRS 2.0 overhaul slated for 2029. The decisions on registration thresholds, penalty mechanics, and file-transfer protocols will determine whether CARF becomes a manageable operational uplift or a costly compliance shock for local crypto firms.
Industry observers warned that rigid rule design could incentivize relocation, while calibrated implementation could protect market depth and convert compliance into a durable operational upgrade. Investors and service providers will treat the consultation outcome and 2026 legislative process as the first real readiness test ahead of 2028’s cross-border reporting start.