The Hong Kong Securities and Futures Commission (SFC) has recently unveiled a growth plan for the virtual asset (VA) industry, outlined in a five-pillar roadmap called "A-S-P-I-Re." This roadmap consists of 12 initiatives organized into five categories: Access, Safeguards, Products, Infrastructure, and Relationships.
Pillar "A" (Access) – Expanding Opportunities for Investors
Initiative 1: Establish Licensing for OTC Trading and Custody Services
The SFC will support a licensing framework for over-the-counter (OTC) trading, ensuring parity between OTC operators and VA trading platforms (VATPs). A separate licensing regime for custody services will create a two-tier structure for trading and custody.
Initiative 2: Attract Global Platforms and Liquidity Providers
The SFC aims to encourage international VA platforms to set up local operations and streamline onboarding for institutional-grade liquidity providers, enhancing market liquidity.
Pillar "S" (Safeguards) – Balancing Investor Protection with Flexible Regulations
Initiative 3: Dynamic Custody Technologies
The SFC will explore emerging custody technologies, moving away from rigid cold storage mandates to more flexible and security-focused frameworks.
Initiative 4: Enhance Insurance and Compensation Frameworks
The SFC will align compensation and insurance requirements with global standards, allowing VA service providers to tailor their arrangements.
Initiative 5: Clarify Onboarding and Product Categorization
The SFC will clarify investor onboarding processes and create a classification system for VA products based on their nature and associated risks.
Pillar "P" (Products) – Diversifying VA Offerings
Initiative 6: Regulatory Framework for Professional Investors
The SFC will consider allowing professional investors to participate in new token listings and trade VA derivatives, contingent on due diligence and risk management.
Initiative 7: Margin Financing Requirements
The SFC will introduce margin financing requirements for VA, making it easier for traditional finance to engage with familiar risk practices.
Initiative 8: Staking and Borrowing/Lending Services
The SFC will evaluate the possibility of allowing staking and borrowing/lending services for professional investors, supported by appropriate risk management safeguards. As a follow-on action, on 7 April 2025, the SFC issued guidelines on licensed VATPs and authorized funds in relation to the provision of staking services.
Pillar "I" (Infrastructure) – Improving Market Monitoring and Collaboration
Initiative 9: Advanced Reporting and Surveillance Tools
The SFC will implement blockchain analytics tools and transaction monitoring systems to combat fraud and market misconduct.
Initiative 10: Strengthen Cross-Agency and Cross-Border Collaboration
The SFC will promote local and global collaboration to establish a comprehensive framework for risk monitoring and asset recovery.
Pillar "Re" (Relationships) – Fostering Education, Engagement, and Transparency
Initiative 11: Guidelines for Financial Influencers
The SFC will introduce guidelines for financial influencers (Finfluencers) to encourage responsible communication and protect investor interests.
Initiative 12: Build a Sustainable Communication and Talent Network
The SFC will work with stakeholders through the Virtual Asset Consultative Panel and support training programs.
Conclusion
The A-S-P-I-Re roadmap presents a comprehensive strategy to sustain Hong Kong's VA market by integrating traditional finance with blockchain innovation. By addressing regulatory gaps and promoting collaboration, the SFC is positioning Hong Kong as a global leader in the VA industry.
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