Focus on Liquidity and Innovation: Hong Kong Securities and Futures Commission Releases Comprehensive Roadmap for Digital Asset Regulation.

On February 11th, at the Consensus Hong Kong Conference 2026, Dr. Edward Yip, Executive Director of Intermediaries at the Securities and Futures Commission, explained how the commission is focusing on liquidity and actively optimizing regulatory measures to drive the Hong Kong digital asset ecosystem towards a new stage of development. Dr. Yip stated that the SFC's ASPIRe roadmap has constructed a forward-looking regulatory framework aimed at enhancing market quality, resilience, and international competitiveness, and that the development of digital assets in Hong Kong has reached a critical stage. He emphasized that this year's focus is on enhancing market liquidity, strategically expanding market participation, encouraging responsible product innovation, increasing market depth, improving price discovery mechanisms, and boosting investor confidence. Dr. Yip pointed out that under pillar A (Access Connect) of the roadmap, the SFC is implementing precise structural reforms to introduce more quality liquidity into the market. He mentioned that the SFC has completed a consultation summarizing proposed regulations on virtual asset trading and custody services, and is now fast-tracking the relevant legislative procedures. At the same time, the SFC will accelerate the evaluation of license applications to ensure that market participants can smoothly transition from the current system to the statutory regulatory framework once the relevant legislation is in effect, providing continuity and certainty for industry operations. Another important measure is allowing affiliated market makers to operate on licensed virtual asset trading platforms, with their affiliated companies providing liquidity, subject to strict conflict of interest monitoring measures, data security measures, information segregation systems, and functional independence requirements. These safeguards will not only narrow bid-ask spreads but also enhance fairness and transparency, ensure priority processing of client instructions, and effectively identify market-making activities. Dr. Yip explained that under pillar P (Products), the SFC is expanding the types of virtual asset products in Hong Kong while maintaining regulatory safeguards consistent with traditional financial market standards. A groundbreaking move is the SFC's approval of introducing virtual asset margin financing, with regulatory requirements anchored in the existing securities margin financing framework, covering monitoring measures related to collateral quality, concentration risk limits, prudent deductions, and governance provisions. This will help clarify the use of virtual assets as collateral and enable the market to responsibly leverage underpinned financial stability, supporting liquidity. Furthermore, Dr. Yip outlined a high-level framework for the sale of perpetual leveraged contracts to professional investors. The framework adopts a principle-based regulatory approach, requiring platforms to provide transparent risk disclosures and establish robust internal risk management measures, including measures on valuation, margin collection, liquidation mechanisms, and governance of insurance funds. This not only preserves platform flexibility but also ensures effective implementation of investor protection measures. To provide clear regulatory guidance while promoting innovative development, Dr. Yip stated that the SFC will launch a digital asset accelerator under pillar Re (Relationships), through which the SFC and industry innovators can engage in systematic communication. The accelerator will provide clear guidance for market builders through designated agents to support innovation, assist in resource allocation for regulatory agencies and industry professionals, and explore new market maker models, financing mechanisms, and leverage products. In conclusion, Dr. Yip emphasized that liquidity is not intrinsic but must be nurtured in an open market environment, sound governance framework, and goal-oriented regulatory design. Through targeted market participation reforms, expansion of product types, and precise support for innovation, Hong Kong is well-positioned to become a leading global digital asset center. By fostering liquidity on a market foundation that values integrity, resilience, and international cooperation, Hong Kong will promote vibrant liquidity development.