Hong Kong government officials announced on Monday plans to relax regulations on digital assets and introduce a tokenization pilot program to promote digital asset trading and investment. The move is part of Hong Kong's broader strategy to establish itself as a global hub for fintech and digital assets.
Julia Leung, CEO of the Securities and Futures Commission (SFC) of Hong Kong, revealed during the Hong Kong FinTech Week conference that the SFC will ease rules to allow licensed virtual asset trading platforms (VATPs) to share global order books with their overseas affiliates.
This adjustment marks a departure from previous regulations, which required VATPs to maintain segregated order books within Hong Kong. The new rules aim to enhance liquidity by enabling platforms to access global markets.
Additionally, VATPs can now distribute virtual assets and regulated stablecoins to professional investors without the previous requirement that stablecoins must have at least 12 months of operational history.
The regulatory changes come as global demand for digital investments surges, with Hong Kong intensifying efforts to compete with financial hubs like Singapore and the U.S.
Meanwhile, the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, stated that the financial sector stands to benefit from increased investment in digital transformation and tokenization.
As part of its "Fintech 2030" roadmap, the HKMA will upgrade its "Fintech Supervisory Sandbox, Ensemble" to facilitate real-value transactions involving tokenized deposits and digital assets.
HKMA Chief Executive Eddie Yue noted, "We are now fostering mature use cases where tokenized deposits can demonstrate clear advantages, starting with tokenized money market funds." However, specific details of these use cases remain undisclosed.
Yue added, "The momentum of digital transformation is reflected in substantial tech investments, with projected annual expenditures exceeding HKD 100 billion (USD 129 billion) over the next three years."
This year, Hong Kong has seen a rise in HKD and USD-denominated tokenized money market funds, signaling growing interest in yield-generating digital investments globally.
Senior executives from two major global banks highlighted the increasing popularity of tokenized products amid the mainstream adoption of digital currencies.
HSBC Holdings PLC CEO Georges Elhedery noted that the bank’s tokenized gold product in Hong Kong has become the world’s third-largest offering of its kind, with "strong retail adoption."
Standard Chartered CEO Bill Winters added, "We believe nearly all transactions will eventually settle on blockchain, and all currencies will be digitized—a view we share with Hong Kong’s leadership."