Hong Kong Enhances Digital Asset Trading Framework Amid Bitcoin Surge

HONG KONG, Feb 19 (Reuters) – As Bitcoin prices experience a notable surge, soaring above $100,000, Hong Kong is moving swiftly to solidify its position as Asia’s leading digital asset hub. This strategic shift comes from the city’s financial regulator, which has announced new initiatives aimed at expanding trading options for virtual assets.

New Licensing Regimes Announced

On Wednesday, the Securities and Futures Commission (SFC) of Hong Kong unveiled plans to introduce additional licensing regimes specifically tailored for over-the-counter (OTC) trading and custody services related to virtual assets. This initiative is designed to enhance market efficiency and provide better protection for investors in the burgeoning cryptocurrency market.

During a keynote speech at CoinDesk’s Consensus Hong Kong 2025 conference, SFC CEO Julia Leung emphasized the importance of these regulatory measures. The SFC is also reviewing potential opportunities for derivative trading and margin financing options for virtual assets, signalling a comprehensive approach toward developing a robust digital asset regulatory framework.

A Steady Push Since 2022

Hong Kong’s ambitions to become a major virtual asset trading centre were first outlined in 2022, following Beijing’s blanket ban on cryptocurrency transactions in mainland China the previous year. Since then, the city has made remarkable progress, including the launch of Asia’s first spot crypto exchange-traded funds and the issuance of nine virtual asset trading platform (VATP) licenses. Paul Chan, the city’s financial secretary, reiterated these achievements during the conference.

Additionally, advancements in regulations surrounding stablecoins have accompanied these initiatives, with relevant legislation being introduced to encourage further innovation in the financial landscape.

Industry Response and Sentiment

Bullish Group, known for its popular crypto news platform CoinDesk, marked a significant milestone by receiving its license as the tenth authorized crypto exchange in Hong Kong just a day prior to the conference. At this pivotal event, industry leaders expressed optimistic sentiments regarding the evolving regulatory environment.

Richard Teng, CEO of Binance Holdings, noted a notable shift in sentiment, particularly among institutional investors and sovereign wealth funds, who are increasingly moving from discussions about entering the cryptocurrency market to actively contemplating their investment strategies.

Bitcoin, which has seen its price more than double in the past year, reached an all-time high of $109,071 on January 20, 2024, before retracting to around $96,000 as of the conference date.

Hong Kong’s Role in China’s Crypto Landscape

Experts believe that Hong Kong’s proactive approach to cryptocurrency regulation may provide insights into Beijing’s potential regulatory framework for virtual assets. As the United States also reassesses its cryptocurrency policies under its new administration, Hong Kong appears to be positioning itself as a strategic laboratory for regulatory innovation.

Lawrence Chu, co-founder and CEO of the digital asset firm IDA, commented, “I think Hong Kong’s particular role for China, not just in crypto but overall, is that it’s one country, two systems,” suggesting that Hong Kong could act as a testing ground for more flexible regulations that might eventually influence mainland policy.

As Hong Kong continues to carve out its niche within the digital asset ecosystem, the developments in its regulatory landscape are sure to have significant implications for investors and stakeholders both locally and nationally.

Reporting by Summer Zhen and Jiaxing Li in Hong Kong
Writing by Scott Murdoch
Editing by Edwina Gibbs, Sonali Paul, and Helen Popper
Summer Zhen specializes in hedge funds and financial markets in Asia, with over a decade of experience in financial journalism and the finance industry.