The Hong Kong Securities and Futures Commission Releases Virtual Asset Roadmap, Guiding Market Development

On February 19, 2025, the Hong Kong Securities and Futures Commission officially announced the "Virtual Asset Roadmap," aimed at addressing various challenges encountered in the development of the virtual asset trading market in Hong Kong.

The roadmap known as "A-S-P-I-Re" starts from five key aspects: Connectivity, Security, Products, Infrastructure, and Engagement, proposing 12 main measures that outline the path for the comprehensive development and regulatory direction of Hong Kong's virtual asset market in the coming years.

As a professional legal team that has been closely following the dynamics of the global Web3 and cryptocurrency sectors, we delve into this roadmap, providing a professional perspective on the current status, challenges, and future development prospects of the virtual asset trading market in Hong Kong.

Background of Roadmap Development

As one of the global financial centers, Hong Kong began exploring the regulatory framework for virtual assets in 2018. In 2023, the Securities and Futures Commission included virtual asset trading in its regulatory scope, requiring trading platforms to obtain licenses and introducing investor protection measures consistent with traditional finance. In April 2024, the first batch of virtual asset spot exchange-traded funds in Asia successfully listed on the Hong Kong Stock Exchange.

However, the virtual asset market in Hong Kong still faces some challenges:

1. Insufficient market activity: Despite the surge in global virtual asset market value in 2024, the Hong Kong market size remains limited.

2. Market access restrictions: Mainland investors find it difficult to participate in compliance, while users from other regions tend to trade on local or global mainstream exchanges.

3. Limited product categories: Trading is mainly concentrated on mainstream cryptocurrencies such as Bitcoin and Ethereum, while the development of derivatives and innovative products is relatively lagging behind.

In the face of these challenges, Hong Kong needs to find new breakthroughs to cope with the intense competition in the global virtual asset market.

Overview of the "A-S-P-I-Re" Roadmap: Five Pillars to Build a New Ecosystem for Virtual Assets

1. Access: Simplify market entry and provide a clear regulatory framework

• Consider establishing a licensing system for OTC trading and asset custody services.
• Allow the establishment of a two-tiered market structure that separates trading from custody.

2. Safeguards: Strengthen compliance prevention and control

• Research on the regulatory framework for new token listings and virtual asset derivatives trading aimed at professional investors.
• Clarify investor access requirements and product classification
• Adjust the ratio requirements of hot and cold wallets, and introduce diversified insurance and compensation mechanisms.

3. Products: Expand product categories, investment tools, and service innovations

• Explore new coin listings and virtual asset derivatives trading exclusive to professional investors
• Explore the financing requirements for virtual asset collateral.
• Consider providing staking and lending services under clear custody and operational guidelines.

4. Infrastructure: Upgrade regulatory infrastructure

• Deploy data-driven blockchain monitoring platform
• Promote cross-border cooperation with global regulatory agencies

5. Relationships: Promote communication and education among investors.

• Build a cooperation mechanism with financial influencers to regulate investor promotion channels
• Build a sustainable industry communication and talent cultivation network

Professional Opinions

In 2024, the global virtual asset market experienced significant restructuring. The interplay of factors such as the rise in technology stocks, the expansion of payment channels, and changes in global liquidity has created new market opportunities while also exposing potential issues.

The market shows a situation where institutional investors and retail investors coexist, but the high holdings of some large players have brought about the risk of market manipulation. In terms of trading models, centralized trading platforms dominate, while decentralized platforms can meet specific needs but face security risks.

Hong Kong, as a financial center in the Asia-Pacific virtual asset trading market, has faced challenges such as talent outflow and limited industry scale. The roadmap released this time has made comprehensive considerations in terms of regulation and promotion:

1. Strengthen regulatory efforts comprehensively, including considering the establishment of a custodian licensing system to achieve comprehensive coverage of virtual asset trading platforms.

2. Propose multiple measures to promote market development, involving trading mechanisms, market concepts, and investor education.

3. Consider allowing virtual asset staking, which is expected to bring multiple benefits such as capital appreciation, enhanced asset liquidity, and increased cash flow returns.

4. Emphasize the importance of investor education, aimed at enhancing the knowledge level and risk recognition ability of investors.

If the initiatives in the roadmap can be successfully implemented, Hong Kong is expected to create a more active, diverse, and secure virtual asset investment environment, occupying an important position in the global virtual asset landscape and leading industry innovation and development.