The virtual asset market in Hong Kong is entering a new era of regulated growth. With the upcoming implementation of the Stablecoin Ordinance and expanding licensed services, both institutional and retail investors are watching closely.
Understanding Virtual Assets and Regulatory Compliance
Virtual assets refer to digitally represented value, which may include utility tokens, stablecoins, asset-backed tokens, or other cryptographic assets. Built on blockchain technology, well-known examples include Bitcoin (BTC) and Ethereum (ETH).
In Hong Kong, the Securities and Futures Commission (SFC) mandates that virtual asset trading must occur on licensed platforms. As of June 30, there are 11 licensed virtual asset trading platforms in the region, including OSL and HashKey Exchange.
These platforms allow direct deposits in fiat currencies like HKD and USD, enabling investors to trade major cryptocurrencies conveniently and compliantly.
👉 Explore licensed trading platforms
Expanding Access Through Licensed Intermediaries
Besides dedicated crypto exchanges, investors can also access virtual asset services through securities firms that have upgraded their licenses. Currently, 42 institutions—including 39 brokerages, one bank, one asset manager, and one internet company—hold upgraded Type 1 (securities trading) licenses.
These firms typically offer omnibus account services, acting as intermediaries that connect clients to licensed exchanges. This allows users to trade virtual assets directly through their existing securities account interface without opening separate exchange accounts.
Major institutions such as Futu Securities, Interactive Brokers, and Victory Securities have already launched such services. More recently, Guotai Junan International became the first mainland-backed brokerage to receive approval for virtual asset trading services.
Diverse Virtual Asset Products Available
The range of virtual asset products in Hong Kong continues to grow, offering multiple avenues for investment:
1. Direct Cryptocurrency Trading
Investors can trade leading cryptocurrencies like Bitcoin, Ethereum, and approved stablecoins directly on licensed platforms or via securities firms.
2. Cryptocurrency ETFs
Hong Kong hosts both spot and futures ETFs for Bitcoin and Ethereum. These exchange-traded funds provide a accessible, lower-cost entry into the crypto market. As of May, the total assets under management for spot cryptocurrency ETFs exceeded HK$3.8 billion.
3. Virtual Asset Portfolio Products
Licensed asset managers—41 of whom hold upgraded Type 9 licenses—can now offer portfolio products that include virtual assets. These are typically aimed at professional investors.
The Rise of Stablecoins and New Regulation
Stablecoins are digital currencies pegged to stable assets like fiat currencies. They combine the benefits of digital transfer with reduced volatility.
Hong Kong’s Stablecoin Ordinance, effective August 1, establishes the world’s first comprehensive regulatory framework for fiat-referenced stablecoins. It requires stablecoin issuers to hold adequate reserves—at least 80% in cash or cash equivalents—and comply with strict disclosure and auditing standards.
This regulatory certainty is expected to attract more participants and increase market confidence.
Globally, the stablecoin market has grown rapidly, with the total supply now exceeding $235 billion. Tether (USDT), the largest stablecoin, has a market cap of over $150 billion.
👉 Learn more about stablecoin strategies
Frequently Asked Questions
Q: Can mainland Chinese residents trade virtual assets in Hong Kong?
A: No. Licensed institutions in Hong Kong are prohibited from providing virtual asset services to residents of mainland China, in compliance with both Hong Kong and mainland regulations.
Q: What is the advantage of trading through a securities firm rather than an exchange?
A: Using a securities brokerage allows investors to trade virtual assets within their existing stock trading account, often with a familiar interface and integrated customer support.
Q: Are stablecoins safe?
A: While designed to be stable, they carry risks such as regulatory changes, issuer solvency, and transparency issues. It’s important to use regulated and well-established issuers.
Q: What products are available besides direct crypto trading?
A: Investors can also gain exposure through ETFs, futures-based products, and professionally managed virtual asset portfolios.
Q: How does the new Stablecoin Ordinance protect investors?
A: The ordinance imposes reserve requirements, audit mandates, and operational standards on issuers to promote transparency and protect users from insolvency risks.
Q: Is cryptocurrency trading legal in Hong Kong?
A: Yes, provided it is conducted through SFC-licensed platforms or intermediaries. Unlicensed trading of virtual assets is prohibited.
Opportunities and Risks in the Market
Hong Kong is positioning itself as an international virtual asset hub. Recent policy documents, including the Policy Declaration 2.0, outline a clear regulatory path and encourage innovation in tokenized securities and decentralized finance (DeFi).
Market size is expanding rapidly. In 2024, the digital asset sector in Hong Kong reached an estimated HK$112 billion and is projected to exceed HK$150 billion in 2025.
However, investors should remain cautious. Regulatory differences across jurisdictions, potential policy shifts, and issuer-related risks require careful consideration. The case of Binance USD (BUSD), which was ordered to cease issuance due to compliance issues, highlights the importance of regulatory adherence.
While the market offers significant opportunities, informed and cautious decision-making is essential for sustainable investing.