Leung Fung-yi "Hong Kong FinTech Week Fireside Chat": A multi-pronged approach to support the sustainable and vigorous development of Hong Kong's digital asset ecosystem.

At the Hong Kong Fintech Week 2025 event, Ms. Ashley Alder, Chief Executive Officer of the Securities and Futures Commission (SFC), shared her thoughts on the regulatory concepts behind integrating the local digital asset ecosystem with global liquidity. She also elaborated on several upcoming initiatives aimed at improving the regulatory framework for digital assets to build a trustworthy, globally competitive, and sustainable ecosystem.

An important step to connect global Liquidity.

In the discussion, Ms. Liang first outlined the development trajectory of Hong Kong's digital asset regulatory system over the past few years: from an initial closed-loop ecosystem focused on protecting investors and built around licensed virtual asset trading platforms, it has gradually evolved into an important stage that connects the local market to global liquidity, aimed at addressing the current challenges of liquidity dispersion in the global digital asset market.

Ms. Liang announced that on the same day, the Securities and Futures Commission issued a circular allowing licensed virtual asset trading platforms to share a global order book with their overseas affiliated virtual asset trading platforms. As the first step of Pillar A (Access Connection) in the SFC's ASPIRe roadmap, the connectivity of liquidity will enable local investors to more effectively utilize global market liquidity, enhance the market price discovery process, and obtain more competitive pricing. The new measures will also attract more institutional trading, promoting the depth and efficiency of the local market. In the future, she also expects more measures to be introduced to facilitate brokers' integration with global liquidity.

Precise regulatory balance and Hong Kong advantages

In terms of how to achieve regulatory balance, Ms. Liang pointed out that overly strict regulation may drive liquidity and talent to jurisdictions with more lenient regulations, while inadequate regulation could undermine market confidence and stability.

Ms. Leung stated that, unlike the current model in Hong Kong of pre-depositing funds and real-time settlement, the new guidelines from the Securities and Futures Commission will allow licensed virtual asset trading platforms to connect to overseas liquidity through overseas affiliated platforms, while implementing multiple safeguards to reduce settlement and integrity risks. For example, it requires overseas virtual asset trading platforms to implement a delivery versus payment and prepayment arrangement, establish a reserve fund in Hong Kong for compensation purposes, and promote a joint supervision plan, aiming to strike an appropriate balance between convenience and protection.

She emphasized that Hong Kong's regulatory system is known for its visibility and transparency, providing clarity, certainty, and consistency to the market, thereby enhancing the confidence of market participants and supporting sustainable market development. The Securities and Futures Commission (SFC) took the lead in adopting the principle of “same business, same risks, same rules” and actively participated in the development of regulatory principles for central digital asset platforms organized by the International Organization of Securities Commissions (IOSCO), prompting the adoption of similar standards in regulatory frameworks, including the Markets in Crypto-Assets Regulation. These coordinations help strengthen the connections and interoperability between markets.

Complete the regulatory puzzle of digital assets

Ms. Liang announced that the Securities and Futures Commission (SFC) issued a second circular on the same day, announcing several new measures to expand the products and services that licensed virtual asset trading platforms can offer. Among these, stablecoins licensed by the Hong Kong Monetary Authority and tokens for professional investors will be exempted from the 12-month track record requirement. The SFC will also clearly allow licensed virtual asset trading platforms to distribute products related to digital assets and tokenized securities, and associated entities of the platforms will also be able to provide custodial services for digital assets or tokenized securities that are not traded on those platforms.

In response to the recent joint consultation issued by the Securities and Futures Commission and the Financial Services and the Treasury Bureau, Ms. Leung stated that the public generally supports the proposed regulatory framework for virtual asset trading service providers and custodial service providers. The Securities and Futures Commission plans to extend the licensing scope of virtual asset service providers to include virtual asset investment advice and asset management services, and is currently in discussions with the government. Regarding virtual asset custodial services, the Securities and Futures Commission will focus on the licensed institutions' management of private key risks and is expected to issue licenses only to the most robust and reliable institutions to ensure the safety of the industry ecosystem.

Effectiveness indicators for building a trustworthy and sustainable ecosystem

As a regulator, Ms. Liang emphasized that the original intention of the CSRC's regulation on traditional capital markets and digital asset markets remains consistent; therefore, the regulatory principles of the traditional market also apply to the latter.

She emphasized that building a sustainable digital asset ecosystem hinges on enhancing the robustness of financial infrastructure for clearing and settlement using blockchain. Furthermore, the scalability and sustainable development of the digital asset market are also indicators of success. A vibrant digital asset market requires diversified products and services to attract different types of investors and active market makers to provide liquidity. Additionally, achieving standard interoperability and harmonization within Hong Kong and across borders is also crucial.

The future of digital finance

Looking to the future, Ms. Liang pointed out that the rise of a new generation of investors is driving the rapid popularity of digital assets. This trend not only brings growth opportunities but also highlights the importance of enhancing investor education and their awareness of new risks.

Finally, she reiterated that the Securities Regulatory Commission has been actively involved in formulating global regulatory standards, committed to promoting consistency among markets. She also acknowledged the contributions of all industry professionals, including traditional financial institutions, digital asset native institutions, and Web3 technology experts, working together to enable Hong Kong to gain an advantage in the ever-changing digital finance sector.