ASPIRe: Looking back and ahead on the regulatory roadmap for virtual assets in Hong Kong

On 19 February 2025, the Securities and Futures Commission (SFC) published ASPIRe, its regulatory roadmap for Hong Kong’s virtual asset market. It’s a fine document, and an inspired acronym. As we approach the first anniversary of its publication, Pádraig Walsh, who leads our Fintech practice, recaps on its key features and outlines the progress since its publication on the regulatory roadmap for the virtual asset market in Hong Kong.

Overview

ASPIRe is the regulatory roadmap from the SFC outlining its approach to regulating the Hong Kong virtual asset market. The SFC developed this forward-looking policy document to guide the market on its approach to balancing investor protection requirements with a safe environment for innovation and progress.

The key underlying principles are:

1.       Provide forward-looking, broad regulatory coverage to avoid uncertainty from regulatory vacuums or new innovations;

2.       Adopt and apply existing traditional finance regulation to support an integrated market;

3.       Use fit-for-purpose regulatory frameworks to align regulation with desired outcomes;

4.       Avoid unreasonable or unintended restrictions on innovation in industry processes and product offerings; and

5.       Foster open dialogue with industry stakeholders and global regulators to encourage dissemination of insights and developments.

The ASPIRe framework is built around five pillars, each with its dedicated objectives and regulatory initiatives. Let’s look at each in turn.

“A” for Access

The current regulatory framework covers existing regulated intermediaries in the securities and futures sector, and primary virtual asset trading platforms. There are obvious gaps in regulatory coverage – primarily virtual asset OTC dealers and virtual asset custodians. Pillar A for access aims to address this by expanding market accessibility, primarily through regulatory enhancement. There are three key initiatives.

1.       OTC trading, dealing, advisory and management services:

1.1     The SFC has acknowledged that virtual asset OTC trading remains important for large volume transactions, allowing buyers and sellers to execute block trades without disruptive price impact. The SFC is also aware of the critical role of OTC desks in liquidity provision and institutional participation.

1.2     The SFC will shape a specific licensing regime for virtual asset dealing services. The new licensing regime will mirror the standards applied to VATP regulation and will apply legal concepts that are familiar from the dealing in securities regulated activity currently overseen by the SFC. The SFC has stated that its approach will be to ensure the regulatory requirements are flexible and proportionate to the level of risk and complexity of the virtual asset dealing activity in question.

1.3     The SFC and the Financial Services and the Treasury Bureau (FSTB) published the consultation conclusions on a proposed virtual asset dealing regime in December 2025. Interested parties can now contact the SFC for pre-application discussions on the proposed virtual asset dealing regime.

1.4     The SFC launched a further consultation on 24 December 2025 for standalone regimes for virtual asset advisory and virtual asset management service providers. The proposed requirements are intended to be substantially equivalent to the current Type 4 and Type 9 regulated securities activities licenses respectively.

2.       Custody services:

2.1     Virtual asset custody regulation in Hong Kong has been anachronistic. The requirement for VATPs to custody client virtual assets under a wholly owned subsidiary was a sensible and practical initial solution for the time when VATP licences first became available in Hong Kong. Third party providers have used the trust or company service provider (TCSP) licence regulated by the Companies Registry; this would not be described as fit-for-purpose regulation.

2.2     The SFC will now shape a specific licensing regime for virtual asset custody services. This will allow for a two-tier market structure segregating trading and custody. The new licensing regime will mirror the standards applied to traditional financial custodians.

2.3     The SFC and FSTB published the consultation conclusions on a proposed virtual asset custodian regime in December 2025. SFC now encourages parties to contact the SFC for pre-application discussions on the proposed custodian regime.

3.       Liquidity providers:

3.1     The SFC will clarify its regulatory and financial rules expectations to facilitate the onboarding process for institutional-grade liquidity providers, market makers and proprietary trading firms. The SFC’s objective is to provide regulatory clarity to reduce barriers for liquidity providers to connect with Hong Kong VATPs.

3.2     On 3 November 2025, the SFC published a circular permitting SFC-licensed VATPs to integrate their orderbooks with qualified overseas VATPs to form a Shared Order Book. The aim is to connect Hong Kong VATPs to the deeper global liquidity, while maintaining market integrity. VATPs who wish to utilise Shared Order Book will be subject to stringent regulatory requirements. The requirements include establishing a comprehensive set of internal rules governing the operation of the Shared Order Book, fully pre-funded orders, and unified cross-platform market surveillance.

“S” for Safeguards

There are three key regulatory initiatives under this pillar.

1.       Dynamic approach to custodianship:

1.1     The SFC will aim to provide technology-neutral, outcome-based standards which will allow VASPs to adopt innovative solutions.

1.2     For instance, the SFC will aim to allow VASPs to adopt tailor made hot/cold storage strategies according to their risk profiles and operational/liquidity demands. The approach will focus on the outcome rather than specific hot/cold storage ratios.

1.3     On 15 August 2025, the SFC published a circular setting out the minimum compliance requirements for virtual asset platform operators with custody of virtual assets. These requirements foreshadow the requirements and obligations under the proposed licensing regime for virtual asset custodians. Minimum requirements include senior management obligations and mandatory cold wallet infrastructures.

2.       Insurance and compensation frameworks: VASPs will be allowed to tailor their own compensation strategies. The resulting frameworks should align with global practices.

3.       Clarify investor onboarding and product categorisation: The SFC will provide guidance to clarify investor assessment and onboarding processes adopting the tried-and-tested existing regulatory regime for investor onboarding. Product categorisation will focus on the actual activity rather than the form of VAs.

“P” for Products

Presently, licensed VATPs operate almost within a closed loop of products and liquidity pools. The SFC recognises this issue, and acknowledges that the range of VA products and services covered under Hong Kong regulations should be expanded. The SFC are pursuing four initiatives under this pillar.

1.       Framework for professional investor-exclusive tokens and VA derivative trading:

1.1     The existing framework will be expanded to enable professional investor-exclusive new tokens listing. Existing rigorous due diligence and disclosure requirements may be adopted.

1.2     Regulated VA derivatives trading will also be permitted to be introduced to professional investors. This will allow for more strategies such as hedging and leveraging, which can help mitigate volatility and allow for more sophisticated risk management strategies.

2.       VA margin financing requirements: The SFC will align established margin financing protocols in traditional securities. This will safeguard VASPs and investors from excessive risk exposure and allow traditional finance to enter the market to enhance diversified market participation.

3.       Custody and operational guide for staking and borrowing/lending services:

3.1     On 7 April 2025, the SFC published a circular setting out its regulatory approach in respect of virtual asset trading platforms offering staking as a service to its clients. Regulation of staking services will be supported by technical and custodial safeguards. Requirements will be set in place to mitigate custodial, slashing and liquidity risks.

3.2     Professional investors may be allowed to participate in borrowing/lending activities. Regulations will cover the handling of collaterals and assessing and mitigating of risks.

4.       Expansion of VATP products, distribution and custody:

4.1     On 3 November 2025, the SFC published a circular expanding the products and services that SFC-licensed VATPs may offer. For token admission, the 12-month track record requirement is removed for offerings to professional investors (including for stablecoins). This is subject to full due diligence and adequate disclosures where the track record is under 12 months. For retail investors, the 12-month track record still applies, except for stablecoins issued by an HKMA-licensed issuer.

4.2     The circular also clarifies that licensing conditions will be amended to expressly permit VATPs to distribute digital asset-related products and tokenised securities in accordance with existing SFC regulations, and to provide custody services for digital assets that have not been made available for trading via the VATP.

“I” for Infrastructure

The SFC will use new technologies and infrastructure to strengthen its oversight capabilities. There are two key initiatives under this pillar:

1.       Efficient reporting and advance surveillance: The SFC will implement means for straight-through reporting of digital asset information and data-driven surveillance tools capable of transaction monitoring, blockchain intelligence, wallet monitoring and tracing.

2.       Cross-agency and cross-border collaboration: The SFC will adopt increased collaboration and intelligence sharing with local regulators and law enforcement agencies. Holistic risk monitoring and surveillance capabilities will further promote cross-border cooperation with global regulators.

“Re” for Relationships

SFC will emphasise transparency in the policymaking process to enable constructive contributions from the industry stakeholders. There are two initiatives under this pillar.

1.       Regulation for financial influencers: The SFC recognises the influence of digital channels on investors’ perceptions and financial behaviours in respect of virtual assets. The regulatory framework will aim to encourage financial influencers to contribute constructively to educate the public and advocating the best practices. The SFC will likewise be vigilant and initiate enforcement action against reckless activity that may cause risk and harm to the public.

2.       Sustainable communication and talent network: The SFC has set up the Virtual Asset Consultative Panel to engage with market participants, industry stakeholders and global forums to obtain insights on market developments. The SFC will foster an open dialogue with industry participants to facilitate clear communication of the regulatory position and best regulatory practices.

Conclusion

We are almost at the first anniversary of when the ASPIRe framework was first published. It represented a thoughtful and strategic approach by the SFC to regulate virtual asset activities in Hong Kong. At that point in time, it was aspirational by name and nature. Since then, the SFC has made significant strides to implementing the roadmap it has outlined. We have seen positive progress on new licensing regimes for virtual asset dealing and custody services, new consultations on licences for virtual asset advisory and management activities, new guidance around staking activities, and more avenues to facilitate broadening product offerings and access to global liquidity pools.

The progress made under each pillar demonstrates the SFC’s commitment to building a robust and forward-looking regulatory environment for the virtual asset market in Hong Kong.

Pádraig Walsh and Jack Lee

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Pádraig Walsh

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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication. This article was last reviewed on 16 January 2026.