February 21, 2025
By Joe Pan
The Securities and Futures Commission (SFC) of Hong Kong announced a comprehensive plan Friday to enhance the city’s virtual asset (VA) market, outlining 12 major initiatives under a five-pillar “ASPIRe” roadmap. Several virtual asset operators and experts interviewed by Blockwind.news responded positively and with cautious optimism to the new announcement.
The strategy, which stands for Access, Safeguards, Products, Infrastructure, and Relationships, aims to streamline global liquidity access, implement adaptive compliance and product frameworks, and upgrade infrastructure to integrate traditional finance with blockchain technology.
Under the Access pillar, the SFC plans to expand market accessibility by developing clear licensing frameworks for virtual asset service providers (VASPs). This move is expected to encourage responsible participation from diverse stakeholders and enhance investor opportunities.
The Safeguards pillar focuses on optimizing compliance requirements without compromising security. The SFC aims to align compliance standards, adopt risk-proportionate oversight, and promote regulatory clarity to ensure a secure trading environment.
For Products, the commission will expand offerings based on investor categorization. This approach aims to enable risk-appropriate investment tools while safeguarding retail investors and mitigating potential risks associated with virtual assets.
The Infrastructure pillar emphasizes modernizing reporting, surveillance, and cross-agency collaboration. Key objectives include strengthening market-wide oversight capabilities, early detection of illicit activities, and safeguarding investor assets through improved technological solutions.
Lastly, the Relationships pillar focuses on empowering investors and industry participants through education, engagement, and transparency. The SFC plans to enhance investor understanding, foster industry participation, and promote fit-for-purpose policymaking.
Notable initiatives include developing new frameworks for regulating VA over-the-counter and custodian services, expanding VA product and service offerings, and optimizing operational requirements for VA trading platforms.
The announcement comes as Hong Kong positions itself as a bridge between traditional financial rigor and blockchain-driven innovation. The city has been at the forefront of VA regulation since 2018.
Industry Reactions
Industry experts view the roadmap with optimism but also offer mixed commentary, highlighting both opportunities and potential challenges.
Henry Yu, Principal Partner at L & Y Law Office, noted, “It’s good for the regulator to acknowledge formally the wish list from the industry. Nevertheless, it could be seen that SFC’s emphasis is to bridge the Tradfi with blockchain industry (instead of the development of DeFi).” Yu also added, “The focus for this year is the Stablecoin Bill and the VA OTC licence – the industry is anxious to see how the global stablecoins eg USDT and USDC would be handled if they do not apply for the HK licence.”
Applicants in Hong Kong have reacted positively to the SFC’s framework. CEO Brian Zhiwei of VDX, an applicant under the SFC VATP regime, stated applicants were “very pleased to now see a forward-looking strategy to explore permitting appropriate staking, margining and derivatives within a regulated framework, from a world-class regulator,” demonstrating a “clear recognition of their growing relevance for institutional investors seeking access to risk management, yield opportunities and liquidity solutions.”
Duncan Wong, founder and CEO of Abelian, a Hong Kong-based quantum blockchain startup and co-founder of PQA Lab, another applicant of the SFC VATP regime, expressed cautious optimism, stating, “Good to see a pretty comprehensive framework but hope that the framework won’t end up having a too restrictive set of guidelines.” He further emphasized, “The expectation would definitely be more positive if emphasis can be placed on how to streamline and support the industry from the cost effectiveness and forward-thinking policies.”
The SFC emphasized that the initiatives are designed to integrate core regulatory principles into the VA market while fostering innovation. The commission plans to implement these measures in phases, with ongoing stakeholder engagement to ensure their effectiveness.
While many in Hong Kong are actively pursuing the VA license, some international players are taking a different approach. Steve Chow, head of B2Broker’s operations, a liquidity provider, stated, “It’s unlikely we will apply for the license process, as we have obtained our license in other jurisdictions since 2014.” Chow noted B2Broker’s existing licenses, suggesting a strategic focus on leveraging established regulatory frameworks elsewhere.
He added: “We have been operating around the world providing liquidity to exchanges since 2014. We have eight different Forex licences including crypto payment license from Estonia and Italy, way before Hong Kong start thinking about (VASP) licenses,”
As global regulators grapple with the rapid evolution of virtual assets, Hong Kong’s strategy may serve as a blueprint for other jurisdictions seeking to harness the potential of blockchain technology while maintaining market integrity.
About the author
Joe Pan is editor and producer at Blockwind.News.
