The Evolution and Characteristics of Hong Kong's Virtual Asset Regulatory Policy Framework

In recent years, the rapid development of virtual assets has posed new challenges to the global financial system and regulatory framework. As an important international financial center, Hong Kong's policy evolution in virtual asset regulation is worth noting. This article will systematically outline the development context of Hong Kong's virtual asset regulatory policies, aiming to provide readers with a comprehensive understanding.

2017-2021: Preliminary Exploration Stage

Currently, Hong Kong has adopted a cautious approach towards virtual assets, primarily focusing on risk warnings, and gradually introducing pilot regulatory measures.

In September 2017, the Hong Kong Securities and Futures Commission issued a statement indicating that some ICOs may constitute "securities" and are subject to regulation. In December of the same year, it required financial institutions providing cryptocurrency-related products to comply with existing regulations.

In November 2018, the China Securities Regulatory Commission proposed to include virtual asset trading platforms that meet standards into a regulatory sandbox. In March and November 2019, the Commission respectively issued regulatory statements regarding STOs and virtual asset futures contracts.

In November 2020, the Financial Services and the Treasury Bureau launched a consultation on the revision of the Anti-Money Laundering Ordinance, planning to include virtual asset service providers in the licensing system. The introduction of this system was officially confirmed in May 2021.

At this stage, Hong Kong is gradually shifting from merely alerting to risks to regulating market behavior, beginning to define participants' responsibilities. However, the overall principle remains "voluntary participation," adopting a relatively inclusive regulatory sandbox mechanism.

2022: A Key Turning Point in Policy Transformation

In October 2022, the Financial Services and the Treasury Bureau released its first policy declaration on the development of virtual assets in Hong Kong, clearly stating that it will "actively promote" the development of the virtual asset ecosystem. This marks a shift in Hong Kong's regulatory approach from a "risk-oriented" to an "opportunity-oriented" one, establishing a direction for subsequent institutional reforms.

The background of this transformation includes: first, the intensification of international competition, which requires Hong Kong to maintain its status as a financial center; second, the development of virtual assets has generated multiple demands, and Hong Kong can play a key connecting role.

From 2023 to Present: Deepening and Implementation of Regulatory Policies

Starting from 2023, the regulation of virtual assets in Hong Kong has entered the "operational implementation" phase. The main measures include:

• The VASP licensing system was officially implemented in June 2023, mandating that virtual asset trading platforms operate with a license.
• In August 2023, the first licensed exchange opened to retail investors.
• Guidelines for tokenized securities related activities to be released in November 2023.
• In December 2023, the sale of virtual asset ETFs will be permitted, and guidelines for fund investment in virtual assets will be released.
• In 2024, the Monetary Authority will launch a regulatory sandbox program for tokenized assets and stablecoins.
• Multiple RWA projects have been successfully implemented.
• Announced in February 2025 that the second virtual asset policy declaration will be released.
• The number of licensed exchanges will increase to 10 by March 2025, and the SFC will release a roadmap for deepening market development.

Characteristics of Hong Kong's Regulatory System

Hong Kong adopts a "layered regulation" strategy based on the existing legal framework, viewing virtual assets as an extension of traditional financial assets. This approach helps reduce regulatory coordination costs and promotes the integration of financial institutions with emerging technology companies. The focus of Hong Kong's regulation is to maintain three lines of defense: financial compliance, anti-money laundering, and investor protection, incorporating virtual assets into the current financial regulatory system.

Overall, Hong Kong's regulatory policy for virtual assets has shifted from a cautious wait-and-see approach to active support, and is currently accelerating the implementation of systems and market development. This evolution reflects Hong Kong's flexibility and foresight as an international financial center when faced with emerging fields.