HONG KONG SAR, CHINA Trends and Developments Contributed by: Pang Lee, Joyce Wang, Mark Liang and Francis Li, Cooley
sory and asset management service providers. The direction of travel is towards a multilayered regula- tory architecture that increasingly mirrors traditional financial markets, with distinct regimes for execution venues, intermediaries, advisers/managers and cus- tody. Accordingly, activities previously characterised as “non-exchange” or “purely custodial” are increas- ingly likely to fall within dedicated licensing catego- ries, accompanied by transitional requirements and enforceable regulatory oversight. Virtual Asset Exposure Through Regulated Funds and ETFs Hong Kong’s public markets have continued to integrate virtual asset exposure through regulated funds and ETFs. In April 2024, Hong Kong regula- tors approved spot Bitcoin and Ethereum ETFs, which commenced trading on 30 April 2024, positioning Hong Kong as the first market in Asia to offer spot crypto ETFs for retail investors. In 2025, the SFC updated its circular on SFC-authorised funds with virtual asset exposure. The update sets out the con- ditions under which funds with more than 10% of net asset value invested in virtual assets may be author - ised for public offering and clarifies the scope of per- mitted virtual asset-related activities. Looking Ahead: Key Themes to Monitor First, stablecoins will move from licensing to live deployment. The market is likely to shift from “licenc- es granted” to “regulated stablecoins in active use”, with the HKMA indicating that launches are expected between mid-late 2026 based on licensees’ business plans. This transition will bring increased focus on real-world use cases, operational resilience and ongo- ing supervisory expectations.
Second, tokenisation will extend from issuance into settlement infrastructure. Hong Kong is expected to continue advancing tokenisation beyond asset issu- ance and into core market plumbing. Ensemble is scheduled to run throughout 2026, with a roadmap toward settlement using tokenised central bank mon- ey. If realised, this could materially enhance the fea- sibility of end-to-end tokenised capital market work- flows, including atomic settlement and programmable transactions. Third, the regulatory perimeter is expected to continue to expand. The FSTB and the SFC have signalled a target to introduce legislation in 2026 covering dealer and custodian licensing, alongside further develop- ment of advisory and asset management regimes. In conclusion, Hong Kong’s latest wave of policy measures and regulatory implementation during the past year has reinforced its position as one of the most credible and investable digital asset jurisdic- tions in the region. By pairing an innovation-friendly agenda with clear licensing expectations (particularly around stablecoins, trading platforms and tokenised products), Hong Kong is signalling that growth will be built on trust, market integrity and real-economy util- ity. Combined with ongoing ecosystem-building and cross-border connectivity, Hong Kong is well-placed to support the next phase of blockchain adoption at institutional scale. As these initiatives progress, the market should see more durable business models, stronger investor confidence and a more resilient foundation for digital finance over the years ahead.
310 CHAMBERS.COM
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