Hong Kong Securities and Futures Commission announces three new virtual asset regulatory measures, stablecoin license to be implemented in March, crypto regulation further upgraded

Article by: Glendon, Techub News

As the global cryptocurrency market remains sluggish and the United States’ cryptocurrency legislation process stalls, Hong Kong is steadily advancing the implementation of its virtual asset policies.

Yesterday, at Consensus 2026, Hong Kong SAR Chief Executive John Lee delivered a speech stating that Hong Kong is actively building itself into a global digital asset innovation hub. The Hong Kong government released the Digital Asset Development Policy Declaration 2.0 in June last year, and in August, implemented the Stablecoin Ordinance, establishing a licensing regime for fiat-backed stablecoin issuers. Currently, the Hong Kong Monetary Authority is processing related applications, with the first batch of stablecoin licenses expected to be issued next month.

The enactment of the Stablecoin Ordinance marks Hong Kong as the first jurisdiction globally to establish a comprehensive regulatory framework for fiat-pegged stablecoins. The imminent issuance of licenses indicates that this regulatory system is moving from “paper rules” to “actual enforcement.” Hong Kong is gradually building a full licensing and supervision system covering virtual asset trading platforms (VASP), custodians, and stablecoin issuers, demonstrating tangible progress in its goal of becoming a global digital asset innovation center.

Although multiple informed sources previously indicated that the first compliant stablecoin licenses in Hong Kong are expected to be issued by the end of March, with HSBC and Standard Chartered likely to be among the first approved institutions, this information was confirmed by John Lee. The news immediately sparked strong reactions in the Hong Kong stock market. Yesterday afternoon, Hong Kong-listed stablecoin concept stocks rose collectively, with Lion Taming Holdings (02562) surging over 27% at one point, LianLian Digital (02598) up more than 11%, and other companies like Huaxing Capital, VSTECS, Guotai Junan International, Yunfeng Financial, and Delin Holdings also climbing.

Later, at noon yesterday, Hong Kong Securities and Futures Commission (SFC) CEO Julia Leung announced three new virtual asset regulatory measures at Consensus 2026 to further improve the virtual asset ecosystem. These include: allowing licensed brokers to provide margin financing services to creditworthy professional clients, with collateral limited to securities and virtual assets—initially only Bitcoin and Ethereum—and applying strict haircut standards similar to traditional finance; permitting licensed platforms to offer perpetual contracts to professional investors, with high transparency requirements and effective management of volatility fees and automatic liquidation risks; and plans to relax related market maker regulations, allowing licensed platforms to provide liquidity through affiliated market-making entities, provided they can demonstrate operational independence and strict conflict-of-interest controls.

Additionally, Julia Leung emphasized that the rapid development of tokenized assets has led to a tokenized gold asset management scale reaching US$400 million, doubling over the past six months. The SFC has approved 11 tokenized money market funds, and the “Project Ensemble” is testing tokenized deposit settlement money market funds. The SFC has also completed consultations on virtual asset trading and custody, with plans to submit relevant legislative proposals jointly with the government within the year.

Shortly after her speech, the SFC quickly issued new guidelines related to these measures. The guidelines reaffirmed that licensed virtual asset trading platforms (virtual asset brokers) are permitted to expand their services to include margin financing, and established a high-level framework to guide virtual asset trading platforms in developing leveraged products for professional investors, including perpetual contracts. The core aim is to help investors implement risk management strategies and enhance liquidity in the spot market.

The guidelines specify that the SFC is expanding product and service diversity under its “ASPIRe” roadmap, released in February 2025, which aims to strengthen the safety, innovation, and growth of Hong Kong’s virtual asset market. The roadmap encompasses five pillars and 12 key measures: connectivity (providing clear regulation to facilitate market participation), protection (reducing compliance burdens while ensuring safety), products (expanding new products and services based on investor classification), infrastructure (modernizing reporting and supervision, and promoting cross-agency cooperation), and engagement (empowering investors and industry through education, communication, and transparency).

Margin Financing

Through the “ASPIRe” roadmap, the SFC is constructing a multi-dimensional framework for the development of the digital asset market. One of the latest initiatives supports virtual asset brokers providing margin financing to their securities margin clients, under sufficient collateral and robust investor protection conditions, to facilitate virtual asset trading.

According to relevant documents, the SFC has set strict limits on virtual asset collateral. If virtual assets are accepted as collateral, only Bitcoin and Ethereum are permitted. A prudent haircut of at least 60% of the collateral’s market value must be applied (meaning a maximum loan-to-value ratio of about 40%). Furthermore, virtual asset collateral cannot be re-hypothecated, reused, or encumbered.

This move is expected to encourage margin clients with sound credit and collateral to participate more actively in virtual asset trading, thereby increasing market liquidity within a risk-controlled framework.

For the market and industry, introducing leverage trading is a hallmark of mature financial markets. This measure can attract more professional and high-risk-tolerance investors (margin clients) into the virtual asset space, amplifying trading volume through “leveraging small to gain big,” significantly enhancing overall market depth and liquidity. Legalizing margin trading is also a key step toward integrating virtual assets into mainstream financial products. It will motivate licensed institutions to develop more sophisticated risk management tools and services, promoting industry professionalism and systemic development.

Furthermore, the SFC’s systematic rollout of this measure under the “ASPIRe” roadmap signals Hong Kong’s “active openness and strict regulation” stance in the virtual asset sector, helping attract compliant financial institutions and capital, and further strengthening Hong Kong’s competitiveness as a virtual asset hub.

High-Level Regulatory Framework

For licensed virtual asset trading platforms, the SFC has established a first-of-its-kind high-level framework to guide their development of perpetual contracts for professional investors, including leveraged products. This framework is part of the “Product Pillar” of the “ASPIRe” roadmap, aimed at expanding product offerings. Its core purpose is to assist investors in implementing risk management strategies and to enhance liquidity in the spot market.

The framework covers product definitions and scope, qualified investors and underlying assets, core requirements for product design and operation, and market monitoring and risk disclosure. It emphasizes that these leveraged products must feature high transparency, clear and accurate information disclosure, and robust operational controls.

This is the first time the SFC has provided a clear regulatory framework for virtual asset derivatives (perpetual contracts), marking a new phase where Hong Kong’s virtual asset market moves beyond spot trading into complex derivatives. This will diversify market offerings, attract professional traders and institutional funds seeking risk management and arbitrage opportunities, and significantly improve market depth, liquidity, and maturity.

In the context of intense global competition in virtual asset regulation, Hong Kong’s SFC demonstrates a proactive and innovation-friendly approach by establishing a clear framework for high-risk products, showcasing its leadership in balancing financial innovation with investor protection. The framework also leaves room for ongoing communication and adjustments based on market development (potentially further detailed or expanded), reflecting a pragmatic and forward-looking regulatory mindset.

For licensed virtual asset trading platforms, the framework imposes detailed and strict requirements on product design, risk controls, system infrastructure, disclosure, and client suitability. This effectively sets high entry and operational standards, meaning only top-tier platforms with strong technological capabilities, comprehensive risk management, and sufficient compliance resources can meet the requirements. This will accelerate industry consolidation and promote the淘汰 of weaker players.

From a professional investor perspective, although the framework is only aimed at qualified investors, the mandatory, highly detailed risk disclosures, real-time transparent trading and risk data (such as insurance fund levels and ADL potential), and strict client suitability assessments greatly enhance product transparency and investor awareness. Investors can better evaluate and bear risks based on more symmetrical information. It also provides qualified professional investors with important hedging and speculative tools, helping them achieve their investment goals more effectively.

Overall, this regulatory framework is undoubtedly a key step for Hong Kong’s virtual asset regulation to enter the “deep water zone,” further consolidating and enhancing Hong Kong’s competitiveness as a trusted global virtual asset center and business hub.

Related Market Makers

To further promote virtual asset trading activities in Hong Kong, the SFC also permits affiliated companies of licensed virtual asset trading platforms to act as market makers on their platforms, provided they implement strong safeguards to reduce conflicts of interest.

This move addresses the current low liquidity in Hong Kong’s virtual asset markets. Under the “Connection” pillar of the “ASPIRe” roadmap, improving platform liquidity is a top priority, with emphasis on attracting liquidity providers. Allowing affiliated companies to act as market makers aims to provide more stable liquidity, alleviating liquidity shortages. More stable and abundant liquidity is crucial for attracting global investors and large institutions.

The main risk is that affiliated market makers could increase conflicts of interest, as their trading instructions might interact with client orders. Therefore, affiliated companies must implement strong safeguards to protect client interests.

This adjustment directly targets core market development bottlenecks, introducing a defined, obligated liquidity provider—related market makers—to improve bid-ask spreads and trading depth.

For licensed platforms, this measure presents significant business opportunities. Introducing affiliated market makers can boost platform liquidity, enhance user engagement, and attract more trading volume. This helps platforms gain a competitive edge. However, it also imposes strict and operationally demanding conditions—such as functional independence, client-first policies, and independent professional reviews—requiring substantial investments in governance, internal controls, systems, and disclosures. This raises compliance costs and technical barriers, ensuring only well-governed, tightly controlled platforms can utilize this policy.

In the long term, this will promote a more professional and compliant virtual asset ecosystem in Hong Kong. It may encourage platforms to establish dedicated, independent market-making teams or spawn a new class of professional virtual asset market makers, further segmenting and professionalizing the industry. Additionally, regulating affiliated market maker activities within a clear, strict framework helps normalize potential “gray area” operations, guiding liquidity supply toward compliant, transparent, and healthy development, reducing market manipulation risks.

This measure is a strategic move by the SFC to address liquidity challenges in the virtual asset market, signaling a shift from basic rule-setting to detailed microstructure design and risk management.

Summary

Through a series of interconnected measures and frameworks, the SFC presents a clear and comprehensive regulatory blueprint: guided by the “ASPIRe” roadmap, driven by liquidity enhancement and product innovation, and protected by high standards of risk controls, ensuring the healthy and orderly development of Hong Kong’s virtual asset market. As Dr. Ye Zhi-heng, Executive Director of the SFC’s Intermediaries Division, pointed out, the SFC is systematically expanding products and services in accordance with the “ASPIRe” roadmap to promote the scaled development of Hong Kong’s digital asset market.

This systematic, forward-looking, and pragmatic regulatory approach will steadily lead Hong Kong’s virtual asset market from the exploration stage into a new phase of scale, institutionalization, and professionalism, ultimately establishing a deep, broad, and resilient global virtual asset hub. Naturally, the implementation of these measures will face challenges, and market scaling will not happen overnight. They will be tested in practice, and this process is an essential step for Hong Kong’s virtual asset market to evolve from “rule-building” to “ecological maturity.”