The financial landscape in Hong Kong is undergoing a transformative shift as the city solidifies its position as a global hub for digital assets. With a clear regulatory "roadmap" now in place and full virtual asset licenses becoming a reality, traditional brokers are poised to unlock new business models and revenue opportunities—ushering in what many are calling a fresh “gold rush” for the securities industry.
👉 Discover how the latest regulatory moves are reshaping Hong Kong’s financial future.
A Strategic Roadmap for Digital Asset Growth
On June 26, 2025, the Hong Kong Special Administrative Region government released the Hong Kong Digital Asset Development Policy Declaration 2.0, outlining a comprehensive action plan for the development of the digital asset ecosystem. This declaration builds on earlier regulatory efforts and reinforces Hong Kong’s ambition to become a leading center for responsible innovation in blockchain and cryptocurrency.
The Securities and Futures Commission (SFC) remains the primary regulator, maintaining a strict but enabling framework. Under current rules, financial institutions must hold a Type 1 license (for securities dealing) and partner with licensed virtual asset trading platforms to offer crypto-related services. The new policy strengthens oversight while expanding permissible activities—marking a pivotal moment for market participants.
According to SFC data, 41 financial institutions have successfully upgraded their Type 1 licenses to include virtual asset trading services. These include 39 brokers, one bank, and one internet company. Additionally, 11 virtual asset platforms are now officially licensed, including subsidiaries of major U.S.-China brokerage firms such as PantherTrade (Futu), YAX (Tiger Brokers), and EX.IO (华盛证券).
Brokers Reimagining Business Models
The market response has been swift and dramatic. On June 25, Guotai Junan International (01788.HK) surged nearly 200%, marking its highest level in a decade, fueled by news that it had received SFC approval to upgrade its license. This allowed the firm to not only facilitate virtual asset trading but also provide advisory services and distribute virtual asset products—including OTC derivatives.
“This is more than just a license upgrade—it’s a strategic pivot,” said Li Shu, CEO Assistant at Wasung Group. “We’re seeing the emergence of a fully integrated ecosystem where investors can access digital assets through their existing brokerage accounts, without needing separate wallets or exchange registrations.”
This integration model—commonly referred to as “Type 1 license enhancement”—enables brokers to act as gateways between traditional finance and the digital economy. Rather than managing custody directly, these institutions connect clients to regulated exchanges like OSL and Hashkey, which were among the first to receive full retail permissions in August 2023.
Dongwu Securities analyst Sun Ting views this shift as a catalyst for industry-wide transformation. “Guotai Junan has proven that top-tier Chinese brokers can operate compliantly in this space,” she said. “Now, competition is moving beyond low-margin brokerage fees toward building cross-border digital financial infrastructure.”
The Dual Pillars of Digital Financial Infrastructure
Sun Ting identifies two core components driving this evolution:
- Clearing Hub: Leveraging stablecoins for fast, low-cost cross-border payments, potentially challenging traditional systems like SWIFT.
- Securitization Engine: Tokenizing real-world assets such as bonds and funds, enabling fractional ownership and 24/7 trading.
These innovations don’t just diversify income—they open new balance sheet opportunities through stablecoin reserves and asset-backed token issuance.
Expanding Regulatory Clarity: The A-S-P-I-Re Framework
In February 2025, the SFC introduced its A-S-P-I-Re regulatory roadmap, a five-pillar framework designed to guide market development:
- A – Access: Controlled market entry for service providers.
- S – Safeguards: Investor protection mechanisms.
- P – Products: Expansion into ETFs, derivatives, and structured products.
- I – Infrastructure: Secure custody, clearing, and settlement systems.
- Re – Relationships: Cross-agency coordination and international alignment.
This structured approach has increased investor confidence and attracted institutional capital. The June 26 policy update further clarifies roles: the SFC will oversee licensing and standards for digital asset service providers, while the Hong Kong Monetary Authority (HKMA) supervises banks engaged in related activities.
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Market Realities and Challenges Ahead
Despite progress, significant hurdles remain. Licensed platforms still lag behind global counterparts in terms of available trading pairs, liquidity depth, and advanced offerings like algorithmic trading or leveraged derivatives.
“Current services don’t fully meet the demands of active crypto traders,” admitted Li Shu. “But the inclusion of derivatives and ICOs in the policy outlook signals that expansion is coming.”
Another major constraint is the ongoing divergence between Hong Kong and mainland China’s regulatory stance. Since the People’s Bank of China’s 2021 ban on all cryptocurrency-related activities, mainland residents have been strictly prohibited from participating in crypto trading—even through offshore platforms.
Under SFC rules, licensed institutions are forbidden from offering digital asset services to individuals with mainland identification. While Hong Kong-based brokers can operate legally within the territory, they must implement robust geolocation checks and KYC procedures to avoid violating cross-border regulations.
FAQs: Understanding Hong Kong’s Virtual Asset Shift
Q: What does "upgrading a Type 1 license" mean for brokers?
A: It allows licensed securities firms to offer virtual asset trading services by partnering with regulated platforms—without direct custody—enabling seamless integration with traditional investment accounts.
Q: Can mainland Chinese investors use Hong Kong crypto services?
A: No. Despite Hong Kong’s open regime, SFC regulations explicitly prohibit licensed firms from serving mainland residents due to PBOC restrictions.
Q: How many virtual asset platforms are licensed in Hong Kong?
A: As of June 2025, 11 platforms hold VASP licenses, including OSL, Hashkey, PantherTrade, YAX, and EX.IO.
Q: What types of virtual asset products are available?
A: Currently, spot Bitcoin and Ethereum ETFs are accessible through approved brokers. Future rollouts may include derivatives, tokenized securities, and DeFi-linked instruments.
Q: Is Hong Kong’s crypto regulation considered strict?
A: Yes—but intentionally so. The SFC applies the principle of “same activity, same risk, same regulation,” ensuring parity between traditional finance and digital assets.
Q: Are more brokers expected to join the space?
A: Absolutely. Firms like Haitong International and CMBI International are reportedly preparing applications, signaling broader industry adoption.
The pace of change suggests that Hong Kong is not just adapting to the digital asset revolution—it’s helping to define it.
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Conclusion: A New Era for Financial Innovation
With a clear regulatory framework, growing institutional participation, and strong government backing, Hong Kong is emerging as a model for balanced digital asset development. For brokers, the opportunity extends beyond short-term stock rallies—it’s about redefining their role in a converging financial world.
As more firms upgrade their licenses and expand product offerings, the line between traditional securities and digital assets will continue to blur. The result? A more inclusive, efficient, and innovative financial ecosystem—one that could set the standard for regulated markets worldwide.
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