A Tour of Recent Developments of the VA Regulatory Regime in Hong Kong
Recent Developments
(1) Hong Kong Expands Crypto Market with Derivative Trading for Professional Investors
The SFC is ready to introduce virtual asset derivatives trading for professional investors as part of its efforts to increase product diversity and reinforce robust risk controls. The move is part of Hong Kong's drive to enhance its competitiveness in the global digital asset market.
With this in mind, the SFC will focus on robust risk management measures to ensure orderly, transparent, and secure trading. The proposed product is designed to facilitate efficient risk transfers, increase liquidity in spot markets where cryptocurrencies area traded instantly, and assist experienced investors in implementing their hedging and leveraging strategies.
The Financial Services and the Treasury Bureau is preparing a second policy statement on virtual assets, exploring how to harness traditional financial services and emerging technologies to drive growth in the VA market.
More encouraging, virtual assets will be classified as qualifying transactions under Hong Kong's preferential tax regimes to attract international fintech players.
On 26 June 2025, the HKSAR Government issued its long-awaited Policy Statement 2.0 on the Development of Digital Assets in Hong Kong, reinforcing its commitment to establishing Hong Kong as a global hub for innovation in the digital asset (DA) field; built upon the foundational measures outlined in its initial policy statement in October 2022.
The Policy Statement 2.0 sets out a vision for a trusted and innovative DA ecosystem that prioritizes risk management and investor protection; the latest statement introduces the main theme of “LEAP” framework with focuses on:
Legal and regulatory streamlining: The government is establishing a comprehensive regulatory framework for DA service providers, including DA exchanges, stablecoins issuers, DA dealing service providers, and DA custodian service providers.
Expanding the suite of tokenised products: The government will regularize the issuance of tokenised Government bonds and incentivize the tokenisation of RWAs to enhance liquidity and accessibility.
Advancing use cases and cross-sectoral collaboration: The government is fostering collaboration among regulators, law enforcement agencies, and technology providers for the development of DA infrastructures.
People and partnership development: The government is strengthening talent development through partnerships with industry and academia, positioning Hong Kong as a centre of excellence for DA knowledge-sharing and international cooperation.
(3) Next move is to seek opinion from market practitioners. Starting with the first “Public Consultation on Legislative Proposal to Regulate Dealing in Virtual Assets” (a non-exhaustive extract)
(1) Scope and coverage: any person who conducted a business in providing services of spot trade of any VAs in Hong Kong will need to be licensed
(2) Business types and Business models:
a) simple dealing;
b) more complex dealing services;
c) all other VA dealing services.
(3) Exemptions:
a) stablecoin issuers who (i) are licensed by the HKMA and (ii) conduct offering or redemption of the stablecoins they issue in the primary market;
b) peer-to-peer trading of VAs between individuals where no intermediary is involved.
(4) Regulatory Requirements:
a) VA dealing service providers that fall within the scope will need to be licensed or registered;
b) The SFC will set out standards of the requirements.
(5) Regulatory Principle:
a) taking the “same activity, same risks, same regulation” principle, taking reference from the VATP licensing regime.
(6) Eligibility:
a) A HK company with two ROs with sufficient financial resources such as HKD5M as minimum paid-up capital or HKD3M as minimum required liquid capital;
b) A licensee or registrant will have to set up a token admission and review committee establishing, implementing and enforcing the criteria for any VA to be made available for/withdrawn from trading;
c) deposits/withdrawals of clients’ VAs to/from the licensees’ wallet addresses;
d) Investor Protection: assessing clients’ VA knowledge, risk profiling, position limits etc.
(7) Licensing Matters: no deeming arrangement to the pre-existing VA dealing service providers.
(8) Powers of the Regulatory Authorities: the SFC still being the licensing and registration authority, and be empowered to impose licensing and registration conditions.
(9) Sanctions: to achieve the necessary deterrent effect and to ensure regulatory
parity among different regimes relating to VA activities
(10) Public Consultation.
(4) Then come with the next round for “Public Consultation on Legislative Proposal to Regulate Virtual Asset Custodian Services” (a non-exhaustive extract)
(1) Definition: the provision of VA custodian service as a business is proposed to be defined as:
by way of business, the safekeeping of (i) VAs on behalf of clients; or (ii) instruments enabling transfer of VAs of clients (including but not limited to private keys) on behalf of clients.
(2) Incidental Exemption for SFC or HKMA regulated entities where the safekeeping of client VAs is wholly incidental to the principal business of providing the VA service.
(3) Examples of VA Custodian like associated entities of SFC-licensed VATPs or banks, licensed or registered fund managers etc.
(4) Eligibility: a regime similar to Type 13 regulated activity.
(5) Licensing Issues: no deeming arrangement to the pre-existing VA Custodian.
(6) Powers of the Regulatory Authorities: the SFC still being the licensing and registration authority, and be empowered to impose licensing and registration conditions.
(7) Sanctions: to achieve the necessary deterrent effect and to ensure regulatory
parity among different regimes relating to VA activities.
(8) Public Consultation.
Active participations from market participants
(5) GF Securities (Hong Kong) issued its first tokenised securities
HashKey Chain announced that GF Securities (Hong Kong) Brokerage Limited (“GFS”) as the first brokerage firm to issue tokenized securities in Hong Kong, has now fully integrated with HashKey Chain as the core on-chain issuance network, and has launched the first daily redeemable tokenized security ,"GF Token". High-net-worth individual professional investors and institutional professional investors can participate in subscription and trading.
"GF Token" is a tokenized security issued by GFS based on its credit rating support where the issuance to investors includes three currencies: USD, HKD, and CNH. Among them, the yield of the US dollar tokenized securities is anchored to the Secured Overnight Financing Rate (“SOFR”), providing users with a fair, transparent, and low-volatility cash management tool denominated in USD.
HashKey Group Chairman Xiao Feng stated that the on-chain integration of Real-World Assets (RWA) requires genuine two-way integration between financial institutions and blockchain technology platforms, and the release of the "GF Token" materialized this concept.
ComplianceOne Consulting Limited 15 July 2025