On November 3, the Hong Kong Securities and Futures Commission (SFC) issued two important circulars: "Circular on Expanding the Products and Services of Virtual Asset Trading Platforms" and "Circular on Sharing Liquidity of Virtual Asset Trading Platforms."

These two circulars significantly relax the restrictions for licensed (VATP licensed) cryptocurrency trading platforms regarding "the products and services they can offer" and "connecting to overseas cryptocurrency market liquidity." They not only include a series of rule updates and clarifications but also establish a new "shared order book" system to achieve the goal of connecting to global virtual asset liquidity.

Notably, the "Circular on Expanding the Products and Services of Virtual Asset Trading Platforms" provides a clearer explanation of the concept of "digital assets," which is quite complex under Hong Kong law:

"The term 'digital assets' includes 'virtual assets,' 'tokenized securities' (a category within digital securities), and stablecoins. 'Digital asset-related products' refer to investment products related to digital assets." This greatly facilitates market participants' understanding of regulatory requirements.

Due to the limited length of the article and the numerous points to discuss regarding the new regulations, today the team will first provide a detailed analysis of the new changes brought by the "Circular on Expanding the Products and Services of Virtual Asset Trading Platforms," while the "Circular on Sharing Liquidity of Virtual Asset Trading Platforms" will be discussed in a couple of days.

The so-called "impossible triangle" of regulation simply means that regulatory authorities cannot "want to… and also want to… and still want to…" Currently, licensed exchanges in Hong Kong exhibit this kind of sentiment.

Previously, the team discussed the current operational status of licensed virtual currency exchanges, summarizing it in one sentence: "not very profitable." One reason for this is the SFC's stringent compliance requirements—licensed exchanges face strict limitations on the clients they can serve, the products they can trade, and the services they can offer, akin to the saying "clear water has no fish."

In fact, this issue has been noted by the Hong Kong SFC, which is actively seeking a "suitable path" that balances compliance requirements while stimulating market vitality. The "Circular on Expanding the Products and Services of Virtual Asset Trading Platforms" is a product of this effort, with specific "relaxation" content and policies described below.

Historically, the Hong Kong SFC has required licensed exchanges to only list virtual currencies (including stablecoins) that have a "12-month track record."

In simple terms, this means that the coins listed must have been active for at least a year, keeping away dubious projects and rug pulls, emphasizing stability and comprehensive protection for investors. However, this also raises a problem: one year may indeed be too long for the virtual currency market, where "one day in the human world equals one year in the crypto world," making it difficult for licensed exchanges to list market-cap coins, thus dragging down overall liquidity.

The new regulations have significantly modified this requirement.

First, there is a relaxation policy for virtual currencies sold to "professional investors." The new regulations completely remove the "12-month track record" review requirement for virtual currencies sold to "professional investors," meaning that both stablecoins and market-cap coins are not required to have been active for one year. This allows cryptocurrency exchanges to provide a broader range of crypto asset investment services to "professional investors."

Secondly, there is a relaxation policy for virtual currencies sold to "retail investors." Considering that "retail investors" have less investment experience and risk tolerance than "professional investors," the "12-month track record" review still partially applies to virtual currencies sold to "retail investors."

On one hand, licensed exchanges can directly sell stablecoins to "retail investors," while on the other hand, other virtual currencies (market-cap coins) still need to adhere to the "12-month track record" limitation.

However, it is important to note that this does not mean a significant reduction in the "listing" review requirements. Licensed exchanges still need to conduct "reasonable due diligence" on the coins they intend to list according to the "Guidelines for Virtual Asset Trading Platforms." If a coin has not been active for a year, it still requires full disclosure; otherwise, it would be considered a violation.

Can VATP licensed exchanges engage in the distribution of digital asset-related products and tokenized securities (limited to virtual assets approved for trading on licensed exchanges)? This question previously lacked a clear answer.

This is mainly because the "standardized licensing regulations" in Hong Kong, formed by a series of laws, codes, regulations, manuals, guidelines, circulars, etc., did not clarify this matter.

According to the "Licensing Handbook for Virtual Asset Trading Platform Operators" and "Guidelines for Virtual Asset Trading Platforms," licensed entities can not only conduct virtual asset trading through the platform but can also provide virtual asset trading services and ancillary services to clients outside the platform (limited to virtual assets approved for trading on licensed exchanges).

However, this regulation is too vague. Does the virtual asset trading business outside the platform include trading in virtual asset financial derivatives? Does it include cryptocurrency custody services? Market participants have varied interpretations of these issues, generally leaning towards the belief that it is permissible but hesitant to take action.

The new regulations clarify the regulatory rules related to this issue.

First, licensed exchanges are explicitly allowed to engage in the following two businesses:

Secondly, licensed exchanges are explicitly prohibited from engaging in the business of providing custody services for digital assets that are not traded on the virtual asset trading platform, either directly or through their affiliated entities.

However, this prohibitive regulation does not completely close the door; in principle, the Hong Kong SFC currently allows exchanges to submit applications to modify relevant licensing conditions or conduct case-by-case reviews of the projects to be custodied. If a project is truly exceptional, an exemption may be granted.

Change is never instantaneous. Currently, the Hong Kong SFC has indeed only taken a small step in regulatory requirements, but it is also a milestone in the history of virtual asset regulation in our country.

After all, this is the first significant rule update in Hong Kong after the completion of standardized licensing rules, and it genuinely considers the pain points and difficulties faced by market participants in their operations, making every effort to respond.

The team appreciates this regulatory progress and looks forward to further "relaxation" measures from the Hong Kong SFC. In the future, we will update the analysis of the "Circular on Sharing Liquidity of Virtual Asset Trading Platforms" to provide a complete interpretation of the new regulations.

Related: Standard Chartered Bank to Launch Bitcoin (BTC) and Ethereum (ETH) Custody Services in Hong Kong in 2026

Original: “Hong Kong SFC Makes a Big Move! Is It Really Easing Restrictions on Cryptocurrencies? (Part 1)”

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。