Hong Kong’s high finance sector regulator plans to allow digital asset derivatives for skilled traders, according to a June 4 report by native outlet China Day by day HK.
The Securities and Futures Fee (SFC) reportedly goals to introduce digital asset derivatives buying and selling for skilled traders as a part of a broader technique to broaden product choices and reinforce the territory’s function as a fintech powerhouse.
The SFC mentioned that precedence shall be given to sound danger administration, with trades performed “in an orderly, clear and safe method.”
Monetary Companies and the Treasury Secretary Christopher Hui Ching-yu confirmed the digital asset derivates plan, whereas suggesting that Hong Kong can also be optimizing its tax framework to draw extra worldwide gamers.
Primarily based on the proposed tax guidelines, digital property will qualify for concessions below Hong Kong’s preferential tax regime for funds, single-family offices, and carried curiosity.
These are simply the most recent initiatives in a current push by Hong Kong’s lawmakers and regulators to make the particular administrative area a extra hospitable surroundings for digital property and a worldwide hub for the trade.
In February, the regulator launched its roadmap for “a brighter future,” by which it set out a five-pillar framework meant to function a strategic motion plan for addressing rising new priorities within the digital asset house and, within the SFC’s phrases, “future-proofing Hong Kong’s VA [virtual asset] ecosystem.”
The particular administrative area’s elevated embracing of the sector comes as the worldwide digital asset market surpassed $3 trillion in worth, with annual buying and selling volumes exceeding $70 trillion, based mostly on SFC knowledge published alongside the roadmap.
HK’s street to digital asset hub
Since its first digital asset policy statement, revealed by the Monetary Companies and the Treasury Bureau (FSTB) in October 2022, the area has considerably broadened its market choices and regulatory steering.
The exact same month AS the primary coverage assertion, Hong Kong launched Asia’s first digital asset futures exchange-traded funds (ETFs). This set the development for what was to comply with, and in April final yr, the SFC approved the functions of a number of spot BTC and ETH ETFs.
The next month, the Hong Kong Monetary Authority (HKMA)—the central financial institution of the particular administrative area—introduced that it had partnered with the People’s Bank of China (PBoC) to broaden the scope of the digital yuan, permitting residents to arrange digital yuan wallets and make funds at native service provider shops. This made it the primary area past mainland China to help the central financial institution digital foreign money (CBDC).
In September 2024, the HKMA partnered with the SFC to co-announce their intent to undertake reporting requirements set by the European Securities and Markets Authority (ESMA) for digital asset over-the-counter (OTC) derivatives.
The area’s embracing of the digital asset sector continued into 2025, and in January the HKMA launched a brand new initiative to help native banks as they launch blockchain merchandise, with tokenization as a key focus areas.
Formally often called the ‘Supervisory Incubator for Distributed Ledger Know-how,’ it should primarily give attention to the dangers that come up as banks transition from experimentation to manufacturing of blockchain companies. The HKMA described the incubator as a “new supervisory association” that can permit native banks to “maximize the potential advantages of DLT adoption by successfully managing the related dangers.”
When it comes to a full regulatory framework for digital property, final August, Hong Kong Legislative Council member David Chiu hinted that the territory might introduce enhanced digital asset laws inside the subsequent 18 months.
“The digital asset trade has made important progress prior to now few years, however we’re nonetheless in a really early stage,” mentioned Chiu, speaking on the third annual Foresight Convention in Hong Kong on August 11, 2024.
He went on to stipulate the town’s strategic plans to draw tech expertise, construct supportive infrastructure, and set up strong supervision, saying that “we must always set up a sound alternate system and shortly introduce laws associated to stablecoins.”
It didn’t take lengthy for this legislative pledge to return to fruition, as in Might this yr Hong Kong became the primary common-law jurisdiction to offer fiat-backed stablecoins a devoted act of their very own—the Stablecoins Ordinance—inserting the HKMA accountable for licensing their issuers.
The brand new ordinance balances the core imperatives of advancing innovation and sustaining financial stability, giving hope that the broader digital asset house will get comparable regulatory remedy within the area, whereas additionally laying down a marker to lawmakers across the globe nonetheless grappling with stablecoin and digital asset laws.
Watch: Richard Baker on engineering a better monetary world with blockchain
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