Hong Kong virtual asset expansion and regulatory comparison

The SFC expanded the scope for licensed virtual asset trading platforms via circulars published on 3 November 2025. These updates allow VATPs to distribute investment products and integrate order books with global affiliate platforms. Licensed operators like OSL Digital Securities Limited and HashKey Exchange can now match trades with clients at global affiliate VATPs. This integration requires prior written approval from the SFC and the joint management of shared order books. The SFC also allows VATPs to provide custody services for a wider range of assets through associated entities. For the professional trader, the removal of the 12-month track record requirement for certain assets simplifies product selection. However, the 12-month track record requirement still applies to assets sold to retail investors. The HKMA expects to issue the first batch of stablecoin issuer licenses in March, which follows the commencement of the HKMA/FSB-led fiat-referenced stablecoin issuer regime. Licensed VATPs must maintain liquid assets in Hong Kong equal to at least 12 months of operating expenses and a paid-up share capital of at least HK$5 million. Under the new tripartite arrangement, the VATP applicant, the SFC, and an external assessor agree on the scope of engagement, and this process requires a sign-off as an assurance assignment by a certified public accountant. Matrixport HK faces a deadline to close its business by 12 January 2027.

Security protocols and compliance requirements

Security requirements dictate how Hong Kong platforms manage digital assets. Licensed VATPs must keep client assets in a wholly owned subsidiary while the SFC mandates a 98% cold storage target for certain assets. To meet these standards, firms use hardware security modules like Thales Luna or ProtectServer to protect private keys. These modules provide FIPS 140-2 Level 3 protection for cryptographic processors. You should verify that your chosen platform uses these high-level security protocols before you deposit any funds.

Compliance involves strict identity verification for stablecoin holders. Firms must implement the Travel Rule for transfers exceeding HKD 8,000 and collect proof-of-ownership via signed messages or micro-transfers for unhosted wallets. To protect data, firms use CipherTrust Transparent Encryption for file-level encryption in physical and cloud environments. CipherTrust Manager provides centralized management for cryptographic keys. For data in transit, the High Speed Encryptor provides network-independent encryption across layers 2, 3, and 4. One firm, Flying Hippo Technologies Limited, had its application withdrawn on 12 October 2026.

Comparing the global regulatory landscape

Different jurisdictions utilize distinct regulatory structures for virtual assets. Singapore’s MAS amended its Payment Services Regulations 2019 on 4 October 2024 to include investor protection for digital payment token services. In Dubai, the Virtual Assets Regulatory Authority (VARA) uses an activity-based licensing model. This model includes specific categories such as broker-dealer, custody, and exchange licenses. The VARA process follows a two-stage path consisting of an In-Principle Approval followed by a full VASP license. This differs from the Hong Kong model where the SFC manages the licensing of VATPs directly. VARA oversees the Emirate’s Special Development Zones and Free Zones, excluding the DIFC. Licensed VASP entities in Dubai can offer crypto-to-fiat exchange, brokerage, and staking. GCEX holds a license from VARA to provide broker-dealer services to institutional and qualified investors. The VARA framework includes a Compliance and Risk Management Rulebook that details AML/CFT policies, while the Market Conduct Rulebook defines obligations around market abuse and insider trading. Will the increasing number of stablecoin issuers in Hong Kong eventually force the MAS to tighten its own payment token framework?