Evolution 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 the world's third-largest financial center, Hong Kong's policy direction regarding virtual asset regulation has attracted significant attention. This article will systematically outline the development context of Hong Kong's virtual asset regulatory policies, aiming to help readers gain a comprehensive understanding of its evolution process.

2017-2021: Initial Exploration Stage

This period marks the beginning of virtual asset regulation in Hong Kong, primarily focusing on risk warnings, while gradually introducing pilot regulatory elements. The regulatory attitude has transitioned from cautious observation to orderly regulation.

• In September 2017, the Securities Regulatory Commission issued a statement pointing out that some ICOs may constitute "securities" and need to be regulated.
• In December 2017, the CSRC required financial institutions providing cryptocurrency-related products to comply with existing regulations.
• In November 2018, the Securities Regulatory Commission proposed to include qualified virtual asset trading platforms in a regulatory sandbox.
• In March 2019, the Securities Regulatory Commission defined STOs and initially stipulated the responsibilities of intermediaries.
• In November 2019, the Securities Regulatory Commission proposed a licensing system for virtual asset trading platforms.
• In November 2020, the Financial Services and the Treasury Bureau conducted a consultation on incorporating virtual asset service providers into the licensing regime.
• In May 2021, the introduction of a licensing system for virtual asset service providers was officially confirmed.

At this stage, Hong Kong is gradually shifting from risk提示 to specific behavioral norms, beginning to define the responsibilities of market participants. Regulatory authorities recognize that virtual assets will become an important component of the financial market, and their attitude is gradually turning towards proactive management.

2022: A Key Turning Point for Policy Transformation

On October 31, 2022, the Financial Services and the Treasury Bureau released the "Policy Declaration on the Development of Virtual Assets in Hong Kong," explicitly stating that Hong Kong will "actively promote" the development of the virtual asset ecosystem for the first time. This marks a shift in regulatory thinking from a "risk-oriented" approach to an "opportunity-oriented" approach, establishing a strategic direction for subsequent institutional reforms.

From 2023 to Present: Rapid Iteration and Deepening of Regulatory Policies

Since 2023, the regulation of virtual assets in Hong Kong has entered the "practical implementation" phase, with the previous experimental model gradually being replaced by a complete and mandatory legal and licensing system.

• In February 2023, the Hong Kong SAR government issued its first tokenized green bond.
• In June 2023, the China Securities Regulatory Commission implemented the "Guidelines for Virtual Asset Trading Platforms" and initiated a licensing system.
• In June 2023, the "Anti-Money Laundering and Counter-Terrorism Financing (Amendment) Ordinance" came into effect, requiring virtual asset trading platforms to operate with a license.
• In August 2023, the first licensed exchange open to retail investors was launched.
• In November 2023, the Securities Regulatory Commission issued a circular regarding activities related to tokenized securities.
• In December 2023, the Monetary Authority and the Securities and Futures Commission jointly issued a circular regarding virtual asset-related activities, allowing the sale of virtual asset ETFs.
• In January 2024, the first issuance of tokenized securities subject to Hong Kong law.
• In March 2024, the Monetary Authority launched the "Ensemble Project" to explore the integration of tokenized assets with wholesale central bank digital currencies.
• In July 2024, the Monetary Authority will launch a regulatory sandbox for stablecoins.
• In February 2025, the second "Virtual Asset Policy Declaration" was released, promoting over-the-counter trading and custodial service systems.
• In February 2025, the first tokenized fund aimed at retail investors was approved.
• In March 2025, the number of licensed exchanges increased to 10, and the Securities Regulatory Commission released the "A-S-P-I-Re" regulatory roadmap.

Characteristics of Hong Kong's Regulatory System

Hong Kong adopts a "regulatory overlay" strategy based on the existing legal framework, implementing "patchwork" regulation of digital assets through the issuance of guidelines or circulars. This approach is efficient and adaptable, allowing for a good integration of institutional transformation and industrial development.

Hong Kong tends to treat virtual assets as an extension of financial assets, incorporating them into familiar regulatory frameworks. This not only reduces regulatory coordination costs but also builds a bridge between financial institutions and emerging technology companies.

Overall, the evolution of Hong Kong's virtual asset regulatory policies reflects its efforts to seek a balance between innovation and stability as an international financial center, providing important references for global virtual asset regulatory practices.