Review of the Development of the Virtual Asset Market in Hong Kong in 2024

April: The First Batch of Spot ETFs for Virtual Assets Approved

The official website of the Hong Kong Securities and Futures Commission has announced the approved list of spot ETFs for virtual assets, including relevant products from several asset management companies. This marks the first launch of such products in the Asian market, with the Ether spot ETF being among the first globally.

June: License Application Process

In May 2023, the Securities and Futures Commission released the VATP license manual and transitional arrangement circular, requiring virtual asset exchanges operating in Hong Kong to obtain regulatory licenses within one year. By the end of May 2024, several platforms actively submitted applications, but some mainstream trading platforms withdrew their applications, sparking discussions in the market about the prospects of virtual assets in Hong Kong.

July: New Trends in Stablecoin Development

The Hong Kong Monetary Authority has announced the list of participants in its stablecoin regulatory sandbox, with several companies selected. Among them, a large technology company has announced it will issue a cryptocurrency stablecoin pegged 1:1 to the Hong Kong dollar, issued on a public blockchain, and has committed to complying with relevant laws and regulatory standards.

August: Ensemble Project Sandbox Launch

The Hong Kong Monetary Authority has launched the Ensemble project sandbox, aimed at promoting the application of tokenization technology in the financial sector. The first phase of the experiment covers themes such as fixed income and investment funds, liquidity management, green finance, and trade supply chain financing. The Monetary Authority and the Securities and Futures Commission will jointly promote the development of the tokenized asset market, enhancing Hong Kong's position in the global financial innovation landscape.

October: Regulatory Changes and Exchange Approvals

The Hong Kong SAR government has appointed a new chairman of the Securities and Futures Commission, with a term of three years. The new chairman emphasized that while protecting investors' interests, he will promote economic growth, enhance corporate governance, and stimulate innovation.

In the same month, the Hong Kong Securities and Futures Commission issued a license to a third virtual asset exchange, which focuses on security tokens and the tokenization of physical assets, aiming to enhance asset liquidity and create more financing and investment opportunities.

November: Virtual Asset Index and Banking Service Innovation

The Hong Kong Stock Exchange officially launched a series of virtual asset indices, providing transparent and reliable benchmark prices for Bitcoin and Ethereum in the Asian time zone, supporting Hong Kong to become Asia's leading digital asset hub.

A Hong Kong digital bank has announced that it is the first bank in Asia to offer cryptocurrency trading services for retail users, supporting Bitcoin and Ethereum transactions, available only to holders of Hong Kong identity cards.

December: Regulation of Stablecoins and Development of Exchanges

The "Stablecoin Regulation Draft" has been submitted for the first reading at the Legislative Council, stipulating that activities such as issuing fiat stablecoins, Hong Kong dollar stablecoins, or promoting stablecoins to the public must obtain a license, with a focus on regulating reserve asset management and ensuring holders' redemption rights.

The Hong Kong Securities and Futures Commission has added four licensed virtual asset trading platforms, bringing the total number of licensed platforms to seven. The Commission plans to establish a consultation group in early 2025 to enhance regulation of virtual asset platforms.

Legislative Council members proposed the introduction of "Digital Connect", allowing mainland investors to buy and sell Hong Kong-recognized digital assets through a special channel, in order to promote financial connectivity between the mainland and Hong Kong and to drive financial innovation and development.