Hong Kong is shifting its digital asset focus to addressing liquidity issues alongside licensing mechanisms by exploring derivatives and margin lending as competition intensifies in the virtual asset space amid US President Donald Trump’s pro-crypto stance.
According to the Securities and Futures Commission, the top priority for developing the city’s virtual asset sector this year is promoting market liquidity to enable licensed institutions to develop more diverse business models and better serve investors.
“Hong Kong’s virtual asset development has historically focused on the licensing mechanism, but the more critical task now is to support the sustainable development of licensed institutions,” Eric Yip Chee-hang, executive director of the SFC’s intermediaries division, said during the Consensus Hong Kong 2025 conference.
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The SFC’s renewed focus was evident during the rollout of a virtual asset development road map comprising 12 key initiatives across five main areas. These include considering derivative products for professional investors, enabling margin lending, and revising custodian requirements to align with market needs.
Hong Kong has been positioning itself as a global digital asset hub since October 2022, when it released a policy statement outlining its ambitions. In June 2023, the SFC introduced a mandatory licensing regime for virtual asset trading platforms.
According to the financial watchdog, 10 such licenses have already been issued.
The road map does not have a fixed timeline. Yip said the 12 initiatives are the result of months of research and communication with various market participants.
“The road map is a reflection of the current stage of progress,” he said, adding that it will undergo continuous updates to remain relevant and flexible as the market evolves.
The Consensus Hong Kong 2025 conference is the first time the iconic cryptocurrency industry gathering has been held in Asia. It also serves as the first major crypto event since the inauguration of Trump, whose pledge to implement crypto-friendly policies has intensified virtual asset competition worldwide.
During a panel discussion, Justin Sun Yuchen, founder of the Tron blockchain network, expressed optimism about the regulatory environment in the US. “Everything has changed dramatically since last year, and we’ve seen many positive developments happen in the US,” Sun said.
He noted that numerous crypto companies are returning to the US or establishing new branches there, but added that Hong Kong remains poised to be “the center of crypto in Asia.”
The digital asset discussion extends far beyond the US, with Singapore and European countries among those grappling with how best to integrate crypto into existing monetary systems, leverage it for economic growth, and manage its associated risks.
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“We compete with everybody,” SFC CEO Julia Leung Fung-yee told a panel discussion. She said the goal for crypto development is to attract institutional investors while emphasizing innovation, and growth, alongside security.
Addressing the event, Financial Secretary Paul Chan Mo-po said that Hong Kong’s commitment to Web3, the next iteration of the internet powered by decentralized technology, extends beyond regulations.
He pointed to substantial investments in related infrastructure and talent development. “Our Cyberport and Science Park have become vibrant hubs for Web3 innovation and fintech, while our universities and partnerships with the industry are nurturing generations of blockchain experts,” Chan said.
