On February 10, 2026, the Securities and Futures Commission (SFC) introduced a significant package of new measures aimed at improving liquidity and supporting innovation in Hong Kong's virtual asset (VA) market. These updates are part of a broader, multi-year plan to develop Hong Kong as a globally recognised regulated crypto hub while maintaining strong investor protections and market stability.
The measures primarily apply to Hong Kong-licensed brokers and Virtual Asset Trading Platforms (VATPs), but they also affect individuals and institutions trading through these platforms, whether based locally or abroad.
At a high level, the SFC wants to encourage growth in the crypto sector, but in a controlled and transparent way. Unlike many offshore markets, Hong Kong is building a system grounded in strict licensing, mandatory audits, and active supervision and the numbers are beginning to reflect that. Trading volumes across licensed platforms reached HKD 26.1 billion (about EUR 2.8 billion) in the first half of 2025 alone, a 233% year-on-year increase.
The SFC now allows licensed brokers to offer financing to clients for crypto trading, meaning clients can borrow money to trade virtual assets potentially increasing overall market activity.
However, the rules are strict. Only well-established assets, such as Bitcoin and Ether, can be used as collateral, and they are heavily discounted (at least a 60% haircut) to reduce systemic risk. Brokers must carefully assess each client's financial situation, including their exposure to crypto volatility and concentration risks.
Brokers are also required to monitor collateral in real time and are prohibited from reusing client assets for other purposes, a rule directly designed to prevent the kind of misuse seen in high-profile global crypto failures in recent years.
The SFC additionally allows brokers to connect to shared order books with affiliated overseas platforms, which can improve liquidity and offer tighter spreads. However, retail investors can only access these cross-border pools with explicit, informed consent and a clear understanding of the additional jurisdictional risks involved.
The SFC has introduced a regulatory framework for trading crypto perpetual contracts, commonly known as "perps." These are high-risk financial products that use leverage and have no expiry date.
Due to their complexity, perpetual contracts are restricted to professional investors only. Platforms must verify that clients understand derivatives before granting access.
Trading platforms must follow strict rules on product design, including transparent pricing methods, clear funding rate disclosure, and real-time data availability. They must also maintain robust risk management systems, including automatic margin checks before trades and clearly defined procedures for handling losses.
Notably, platforms are not permitted to lend money for margin trading in perps. They must also ensure clients are fully informed of all major risks, including the possibility of forced liquidation and total loss of capital.
To increase trading activity and improve price discovery, the SFC now allows affiliated companies to act as market makers on licensed platforms. Market makers support healthy markets by continuously placing buy and sell orders, reducing spreads and improving execution quality.
Under normal circumstances, related companies are not allowed to trade on the same platform. However, the SFC may now permit this in specific cases, subject to strict controls:
Clear structural separation between the platform and the market maker
Information barriers to prevent unfair advantages or front-running
Priority always given to client orders over market maker orders
Full identification and audit trails on all market maker trades
Before commencing operations, platforms must submit a compliance report confirming that these controls are in place and effective, and must continue monitoring on an ongoing basis.
These three measures are significant, but they sit within a much larger and evolving regulatory framework that is worth understanding in full.
Retail access remains deliberately limited. Everyday investors can only trade a small number of major tokens through licensed platforms, and they are not permitted to access advanced products like perpetual contracts. This reflects the SFC's cautious, tiered approach to investor protection.
The VATP licensing regime is the backbone of the system. As of February 2026, the SFC has granted licences to 12 Virtual Asset Trading Platforms, including HashKey Exchange and OSL Digital Securities,two of the earliest and most established players in the market. The licensing process is rigorous, involving on-site inspections, independent cybersecurity assessments, capital thresholds, and a multi-phase review before full approval is granted.
Asset protection is non-negotiable. Licensed platforms must keep client assets fully segregated from company funds, maintain at least 50% of cold wallet assets insured, and cover 100% of hot wallet holdings. These rules are designed to prevent the kinds of catastrophic client losses seen in past global crypto collapses.
Stablecoins are now regulated too. Hong Kong's Stablecoins Ordinance, passed in May 2025 and in force since August 2025, places fiat-referenced stablecoin issuance under Hong Kong Monetary Authority (HKMA) supervision. Any issuer of a Hong Kong dollar-pegged stablecoin, whether based locally or abroad must be licensed. The first batch of licences is expected in early 2026.
Tokenization is becoming a pillar of the strategy. Over $2 billion in tokenised securities have already been issued through pilots overseen by the HKMA. This positions Hong Kong not just as a crypto trading hub, but as a broader digital asset infrastructure centre.
Hong Kong is not operating in isolation. It is competing directly with Singapore and Dubai for institutional capital and crypto business.
Singapore, regulated by the Monetary Authority of Singapore (MAS), has a mature stablecoin licensing framework and a well-established Payment Services Act. However, in recent years, Singapore has tightened its rules significantly, including strict requirements for overseas digital token service providers prompting some crypto firms, including major exchanges, to explore relocating to Hong Kong or Dubai.
Dubai has taken a different path. Through its Virtual Assets Regulatory Authority (VARA), the world's first crypto-specific independent regulator, Dubai has built an agile, innovation-forward framework that has attracted a large number of global exchanges. Its approach is widely seen as less restrictive than Hong Kong's, making it appealing to firms that want regulatory recognition without maximum compliance burden.
Hong Kong's edge lies in its proximity to mainland China, a unique geographical and financial advantage that neither Singapore nor Dubai can replicate. It serves as the primary regulated gateway for institutional capital flowing between China and the global digital asset ecosystem. Its legal framework is also aligned with international standards, including FATF recommendations, making it credible to large institutional investors who require that level of assurance.
One development that deserves more attention is the SFC's launch of the Digital Asset Accelerator. This initiative creates a structured communication channel between regulators and industry participants similar in concept to a regulatory sandbox allowing new products and business models to be tested in a controlled environment before formal approval.
This matters because it signals that the SFC is not trying to lock innovation out of Hong Kong. Instead, it is building the infrastructure to evaluate and eventually approve novel financial products in a measured way. For companies developing new crypto derivatives, tokenised instruments, or DeFi-adjacent services, the Accelerator represents the clearest on-ramp into Hong Kong's regulated market.
The new measures do introduce additional complexity to the system. Allowing financing, leveraged products, and affiliated market makers increases liquidity but it can also amplify volatility during periods of market stress. Forced liquidations, rapid price dislocations, and concentration of risk in a small number of licensed platforms are all factors that could become challenges as the market grows.
The SFC has signalled awareness of these risks, but the real test will come during the next significant market downturn.
Hong Kong is not throwing open the doors to crypto without conditions. It is doing something more deliberate: building a structured, high-standards market where growth is permitted, but only within clearly defined limits.
The combination of 12 licensed platforms, a stablecoin ordinance, tokenisation pilots, and now expanded products for professional investors positions Hong Kong as one of the most comprehensive regulated crypto environments in the world. The question is not whether the framework is serious, it clearly is. The question is whether the pace of innovation can match the pace of regulation.
For institutional investors, the answer to that question may well determine where in Asia they choose to build their digital asset infrastructure.
Whether you are a platform operator, an institutional investor, or simply tracking the evolution of global crypto regulation, Hong Kong's 2026 developments are too significant to ignore. Stay informed, monitor SFC announcements closely, and consult our team before making any virtual asset decisions.
