Hong Kong bares plan to allow digital asset derivates trading
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Hong Kong's top finance sector regulator plans to permit digital asset derivatives for professional investors, according to a June 4 report by local outlet China Daily HK.
The Securities and Futures Commission (SFC) reportedly aims to introduce digital asset derivatives trading for professional investors as part of a broader strategy to expand product offerings and reinforce the territory's role as a fintech powerhouse.
The SFC said that priority will be given to sound risk management, with trades conducted 'in an orderly, transparent and secure manner.'
Financial Services and the Treasury Secretary Christopher Hui Ching-yu confirmed the digital asset derivates plan, while suggesting that Hong Kong is also optimizing its tax framework to attract more international players.
Based on the proposed tax rules, digital assets will qualify for concessions under Hong Kong's preferential tax regime for funds, single-family offices, and carried interest.
These are just the latest initiatives in a recent push by Hong Kong's lawmakers and regulators to make the special administrative region a more hospitable environment for digital assets and a global hub for the industry.
In February, the regulator released its roadmap for 'a brighter future,' in which it set out a five-pillar framework intended to serve as a strategic action plan for addressing emerging new priorities in the digital asset space and, in the SFC's words, 'future-proofing Hong Kong's VA [virtual asset] ecosystem.'
The special administrative region's increased embracing of the sector comes as the global digital asset market surpassed $3 trillion in value, with annual trading volumes exceeding $70 trillion, based on SFC data published alongside the roadmap.
HK's road to digital asset hub
Since its first digital asset policy statement, published by the Financial Services and the Treasury Bureau (FSTB) in October 2022, the region has significantly broadened its market offerings and regulatory guidance. The very same month AS the first policy statement, Hong Kong introduced Asia's first digital asset futures exchange-traded funds (ETFs). This set the trend for what was to follow, and in April last year, the SFC approved the applications of several spot BTC and ETH ETFs.
The following month, the Hong Kong Monetary Authority (HKMA)—the central bank of the special administrative region—announced that it had partnered with the People's Bank of China (PBoC) to expand the scope of the digital yuan, allowing residents to set up digital yuan wallets and make payments at local merchant stores. This made it the first region beyond mainland China to support the central bank digital currency (CBDC).
In September 2024, the HKMA partnered with the SFC to co-announce their intent to adopt reporting requirements set by the European Securities and Markets Authority (ESMA) for digital asset over-the-counter (OTC) derivatives.
The region's embracing of the digital asset sector continued into 2025, and in January the HKMA launched a new initiative to support local banks as they launch blockchain products, with tokenization as a key focus areas.
Officially known as the 'Supervisory Incubator for Distributed Ledger Technology,' it will primarily focus on the risks that arise as banks transition from experimentation to production of blockchain services. The HKMA described the incubator as a 'new supervisory arrangement' that will allow local banks to 'maximize the potential benefits of DLT adoption by effectively managing the associated risks.'
In terms of a full regulatory framework for digital assets, last August, Hong Kong Legislative Council member David Chiu hinted that the territory could introduce enhanced digital asset regulations within the next 18 months.
'The digital asset industry has made significant progress in the past few years, but we are still in a very early stage,' said Chiu, speaking at the third annual Foresight Conference in Hong Kong on August 11, 2024.
He went on to outline the city's strategic plans to attract tech talent, build supportive infrastructure, and establish robust supervision, saying that 'we should establish a sound exchange system and soon introduce legislation related to stablecoins.'
It didn't take long for this legislative pledge to come to fruition, as in May this year Hong Kong became the first common-law jurisdiction to give fiat-backed stablecoins a dedicated act of their own—the Stablecoins Ordinance—placing the HKMA in charge of licensing their issuers.
The new ordinance balances the core imperatives of advancing innovation and maintaining financial stability, giving hope that the broader digital asset space will get similar regulatory treatment in the region, while also laying down a marker to lawmakers around the globe still grappling with stablecoin and digital asset legislation.
Watch: Richard Baker on engineering a smarter financial world with blockchain
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