Hong Kong is preparing to introduce a more detailed policy framework for virtual assets by the end of this year.
Financial Secretary, Paul Chan, announced the plans during the Hong Kong Web3 Festival on 7 April, highlighting the city’s continued push to strengthen its position in the Web3 and digital asset sectors.
The upcoming policy statement will build upon the government’s earlier commitments. It will focus on using Web3 technology to improve traditional financial services, support the real economy, and expand the application of digital assets across industries.
“Later this year, we will unveil a second policy statement on the development of virtual assets”, said Chan. He explained that the goal is to create a regulatory environment that encourages innovation while maintaining market stability and protecting investors.
The new move follows Hong Kong’s first virtual asset policy, released in October 2022. That initial statement set out a broad framework to guide the development of the sector and promote the responsible growth of virtual assets.
Since then, Hong Kong has introduced a licensing regime for virtual asset trading platforms. So far, the Securities and Futures Commission (SFC) has granted licences to 10 platforms. This system has helped to formalise operations and enhance investor protection.
The city has also become a leader in virtual asset spot exchange-traded funds (ETFs). It now hosts the largest virtual asset (VA) ETF market in the Asia-Pacific region, providing new investment opportunities for institutional and retail investors alike.
In addition, the government is working on legislation to regulate stablecoins. The licensing regime for stablecoins is expected to take effect later this year, marking another step towards tightening oversight of the digital asset market.
At the same time, authorities are reviewing rules for over-the-counter (OTC) virtual asset trading and custodial services. Public consultations are ongoing as Hong Kong looks to expand its regulatory net and ensure safer operations across the sector.
Chan stressed that regulation alone is not enough. “We support a multi-stakeholder approach where governments, regulators and market players across different territories and regions come together to drive forward the sustainable development of Web3”, he said.
One example of this collaborative approach is the Hong Kong Monetary Authority’s Project Ensemble. This initiative provides a sandbox environment where financial institutions can experiment with tokenising real-world assets under regulatory supervision.
Hong Kong has generally taken a more welcoming stance toward Web3 than some of its neighbouring jurisdictions. The city aims to become a regional hub for blockchain and digital asset activities while remaining firmly focused on financial stability.
“The lesson we have learnt is that we need to put it under a balanced regulatory framework so as to enable the sector to grow in a responsible and sustainable manner”, Chan noted.
Strengthening investor protections for staking
As part of its wider efforts to strengthen cryptocurrency regulation, Hong Kong’s SFC has also introduced new rules for virtual asset trading platforms and authorised funds involved in staking.
This move reflects the city’s commitment to boosting oversight and improving investor safety in a rapidly growing market.
The updated rules set out clearer guidelines for staking—a process that not only supports blockchain security but also allows investors to earn returns.
Under the new framework, licensed crypto platforms can offer staking services more freely, provided they meet strict requirements.
This initiative supports the SFC’s “ASPIRe” strategy, which focuses on Access, Safeguards, Products, Infrastructure, and Relationships. The framework aims to create a more structured environment for virtual asset growth in Hong Kong.
Platforms that offer staking must now take concrete steps to protect staked assets, minimise service disruptions, and clearly explain the risks to investors. These new rules mark a significant step toward making staking a safer investment option.
The SFC also updated its circular for SFC-authorised VA funds. These funds are now allowed to stake assets, but only through licensed platforms or approved institutions.
To manage risk and protect liquidity, a cap has been set on how much of a fund’s assets can be staked at any one time.
The CEO of the SFC, Julia Leung, said expanding regulated crypto services is essential for developing Hong Kong’s virtual asset market. However, she emphasised that investor protection must always remain the top priority. “Strong regulation and compliance are the key to achieving this balance”, she said.
The SFC’s broader aim is to make Hong Kong a leading global hub for digital assets. Through the ASPIRe framework, the Commission wants to ease market entry for legitimate players while maintaining high standards of investor protection.
In February 2025, the SFC announced plans to launch new licensing regimes for over-the-counter (OTC) virtual asset trading and custodial services.
These new measures are designed to boost market efficiency, increase transparency, and build greater confidence among investors.
Compliance measures against unlicensed platforms
Previously, the Hong Kong SFC had taken decisive action against illegal crypto platforms. Last year, it issued warnings against seven cryptocurrency trading platforms that were operating without proper licences.
This move formed part of the SFC’s ongoing efforts to crack down on fraud and scams in the digital asset industry.
Since January 2020, the SFC has maintained an Alert List. This list names exchanges that are either unlicensed or falsely claim connections with Hong Kong.
Some of the names added include Taurusemex, Yomaex, Bitones.org, BTEPRO, CEG, XTCQT, and Bstorest.
These platforms are suspected of engaging in fraudulent activities, such as blocking customer withdrawals and demanding extra “fees” to allow withdrawals.
To further tighten compliance, Hong Kong regulators took bold steps at the start of 2024. The SFC required all crypto exchanges operating in the city to apply for a licence by 31 May. Any exchange that failed to meet this deadline was ordered to shut down.
This strict approach is part of a wider strategy to bring more transparency and security to Hong Kong’s fast-growing cryptocurrency market.
During this period, more than 22 crypto exchanges applied for licences to continue operations. However, a large number of these exchanges later withdrew their applications, reflecting the tough regulatory standards set by the SFC.
The wave of licence withdrawals highlights just how rigorous Hong Kong’s new compliance environment has become.
It also underscores the city’s determination to ensure that only trustworthy, responsible operators remain in the market.
By imposing strict regulations, the SFC aims to protect investors, strengthen market integrity, and reinforce Hong Kong’s position as a serious player in the global virtual asset space.
