Hong Kong Financial Authorities: 'Need to Ease Virtual Asset Regulatory Burden... Considering Derivatives Approval' [Consensus Hong Kong 2025]

From left: Elizabeth Wong, Director and Head of Fintech Unit at Hong Kong Securities and Futures Commission (SFC), Jomkwan Kongsakul, Deputy Secretary-General of Thailand Securities and Exchange Commission (SEC), and Huei Wong, Executive Director of Digital Strategy and Innovation at Securities Commission Malaysia (SC). Hong Kong=Reporter Lee Young-min

Hong Kong regulatory authorities are pursuing plans to expand virtual asset financial products in their jurisdiction.

Elizabeth Wong, Director and Head of Fintech Unit at Hong Kong Securities and Futures Commission (SFC), attended the Asia regulatory session at 'Consensus Hong Kong 2025' held at the Hong Kong Convention Centre (HKCEC) on the 20th (local time) and stated that "we will expand services for virtual asset trading platforms." Director Wong noted that "currently, only spot trading and custody services (for virtual assets) are permitted in Hong Kong," adding that "however, these services are considered low-profit business models."

She continued, "We are reviewing the introduction of virtual asset staking, derivatives, and lending/borrowing services," adding that "these are likely to be initially introduced on a limited basis to professional investors only."

Previously, Hong Kong announced 'ASPIRe,' a roadmap for fostering the virtual asset industry, on the previous day (18th). The roadmap's core elements include clarifying virtual asset regulations and expanding virtual asset products and services. Director Wong stated that "the (roadmap's) goal is to increase capital liquidity in Hong Kong and attract virtual asset-related business activities," adding that "we will bring more virtual asset-related activities, such as over-the-counter (OTC) trading, into the licensing framework."

Director Wong emphasized the need to reduce the regulatory burden on the virtual asset industry. She stated, "Currently, Hong Kong operates (one of) the strictest virtual asset regulatory frameworks (in the world)," and revealed that "we are checking if there are areas where the industry unnecessarily feels (regulatory) burden." She continued, "(The authorities' goal is) to maintain investor protection levels while easing regulations," adding that "for example, we are considering adjusting custody requirements or the ratio between hot wallets and cold wallets."

She also mentioned investor protection principles. Director Wong stated, "We will develop policies that align with industry desires," but emphasized that "investor protection is the most important thing above all." She added, "No matter how much we ease regulations, we will not compromise on the basic principle of investor protection."

The session also raised the need for cooperation among national virtual asset regulatory authorities. Director Wong explained, "Hong Kong announced the 'Same Risk Same Rules' principle in the IOSCO Fintech Task Force (TF) in 2023," stating that "it's a concept that principles applied to existing securities markets should be equally applied to virtual asset markets." She continued, "Currently, many Asian countries are taking similar approaches," adding that "if this direction continues, (regulatory) differences between countries will gradually decrease."

Thailand and Malaysia also expressed agreement on the need for cooperation between regulatory authorities. Huei Wong, Executive Director of Digital Strategy and Innovation at Securities Commission Malaysia (SC), stated, "While countries may consider virtual assets as either commodities or securities, regulatory standards tend to converge," adding that "consequently, market interoperability will become increasingly important." Jomkwan Kongsakul, Deputy Secretary-General of Thailand Securities and Exchange Commission (SEC), said, "If only certain countries apply strict regulations, businesses will move to countries with looser regulations," emphasizing that "information sharing and cooperation (between regulatory authorities) is essential to prevent this."