HONG KONG SAR, CHINA Trends and Developments Contributed by: Pang Lee, Joyce Wang, Mark Liang and Francis Li, Cooley
Project Ensemble On 13 November 2025, the HKMA launched Ensem- ble , the pilot phase of Project Ensemble, to support real-value transactions involving tokenised deposits and digital assets within a controlled environment. Ensemble builds upon the successful outcomes of the Ensemble Sandbox experimentation, which since August 2024 has allowed industry pioneers to test comprehensive end-to-end use cases for settling digi- tal asset transactions using experimental tokenised deposits. In the new pilot phase, the HKMA aims to enable faster, more transparent and efficient settle- ment of real-value tokenised transactions. The initial focus will be on empowering market participants to utilise tokenised deposits in tokenised money market fund transactions and to manage liquidity and treasury needs in real time. Tokenised Investment Products for Retail While institutional use cases continue to dominate headlines, Hong Kong has also enabled selected tokenised products to be offered to retail investors within a regulated framework. In a Legislative Council reply in July 2025, the government noted that the SFC had authorised a gold token providing fractional own- ership of physical gold in 2024, the first retail-acces- sible tokenised investment product in Hong Kong. It further stated that, in the first quarter of 2025, the SFC authorised three tokenised money market funds for retail investors (described as the first in the Asia- Pacific region), with total assets under management exceeding USD700 million as of end-March 2025. These developments build on the SFC’s November 2023 circular on the tokenisation of the SFC-author- ised investment products, which outlines the condi- tions under which tokenisation of Part IV authorised products may be permitted. These developments also convey the key signal that tokenisation is evolving into a distribution format, rather than a standalone asset class. As a result, operational considerations (such as recordkeeping, transfer restrictions, custody arrange- ments and cybersecurity controls) become central to product design and implementation, even where the underlying assets remain traditional.
Expanding the Perimeter Beyond Exchanges The second policy statement and the “LEAP” framework: towards a unified regime On 26 June 2025, Hong Kong issued its second policy statement on digital assets, introducing the “LEAP” framework. The statement articulated a clear intent to develop a comprehensive and unified regulatory regime covering exchanges, stablecoin issuers, deal- ing service providers and custodian service providers. It also highlighted tokenisation priorities, including the regularisation of tokenised government bond issuance and clarification of stamp duty treatment for tokenised exchange-traded funds (ETFs). For clients, the second policy statement is less a tech- nical rulebook than a directional roadmap. It helps explain the sequencing of developments: first estab- lishing the stablecoin regime, followed by expand- ing VATP and intermediary capabilities, and then progressing towards dedicated regimes for dealers, custodians and, subsequently, advisory and asset management functions. Consultation on dealer and custodian licensing regimes On 27 June 2025, the Financial Services and the Treasury Bureau (FSTB) and the SFC launched a joint public consultation on proposed licensing regimes for virtual asset dealing and custodian service pro- viders, with the consultation period running through 29 August 2025. This consultation addresses two of the most significant regulatory gaps observed in many jurisdictions: (i) non-exchange brokerage and over- the-counter (OTC) dealing activity; and (ii) custody services provided outside exchange environments. It also aligns with the SFC’s broader objective of inte- grating Hong Kong’s liquidity with global markets while strengthening investor protection. Consultation conclusions and 2026 legislative pipeline On 24 December 2025, the FSTB and the SFC pub- lished their consultation conclusions on the proposed regimes for virtual asset dealing and custody, and indicated a target to introduce the relevant legislation into the Legislative Council in 2026. At the same time, regulators initiated further consultation on establish- ing separate licensing regimes for virtual asset advi-
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