Hong Kong's SFC to Permit Trading of Tokenized Funds on Licensed Virtual Asset Platforms

At the Hong Kong Web3 Festival on April 20 (UTC+8), Yip Chihang, Executive Director of the Intermediaries Division at Hong Kong's Securities and Futures Commission (SFC), said the Financial Stability Board (FSB) ranked Hong Kong's digital asset regulatory framework among the highest globally in last year's peer review. Yip outlined six milestones delivered over the past 12 months, including: allowing platform staking and staking for recognized funds; jointly launching and completing a public consultation with the Financial Services and the Treasury Bureau (completed on December 24) on a virtual asset trading and custody regime; rolling out the Crypto Tag automated reporting initiative in Q4 last year (also referenced in Paragraph 104 of the Policy Address); introducing a perpetual contracts framework in February to enable margin financing and related market making; and launching a tender for a virtual asset accelerator program. Looking ahead, the SFC will focus on three clusters over the next 12 months: 1) Innovative regulation: the SFC is developing regulatory frameworks for virtual asset trading, custody, management and advisory services in parallel. Yip said the regulator received a 260-page draft regulation last week and will continue advancing custody technology and insurance compensation mechanisms. 2) Product-level practical innovation: the SFC will announce a new initiative allowing virtual asset platforms to trade tokenized funds, not only tokenized assets. Yip said this would be the world's first predictable framework enabling trading of tokenized recognized funds on regulated platforms, starting with a pilot for tokenized money market funds. The SFC also plans consultations covering perpetual contract structures, margin financing and capital adequacy requirements. 3) Collaborative innovation: the SFC is working with licensed institutions via initiatives such as Crypto Tag to automate reporting, and is signing bilateral memoranda of understanding with multiple jurisdictions to reduce cross-border regulatory arbitrage. (Source: Foresight News)