Hong Kong Opens Global Market Access for Licensed Crypto Exchanges

Julia Leung, CEO of the Securities and Futures Commission (SFC), has officially confirmed that licensed crypto exchanges will soon be allowed to connect their Hong Kong entities with global order books, and the administration is planning to end its current isolated trading model that limits trades within the city. Julia Leung confirmed the new strategy at the city’s flagship Fintech Week on Monday (Nov 3). Under the newly implemented framework, all the SFC-licensed crypto trading platforms will be able to or allowed to link their Hong Kong operations with international order books. Inspired by Singapore and Japan, Hong Kong aims for a more balanced and safer approach, promoting innovation and prioritizing safety.

The latest initiative from the Hong Kong administration is a significant step in the history of the country. The move would improve the position to win the race for becoming the best digital asset hub in the world. The change of moves will deviate Hong Kong from its traditional methods. Previously, models that only matched orders within Hong Kong were available, but the new model would bring crypto trading in line with local rules that apply to traditional assets. Leung said that they could say they were on the tougher side and that once they were sure that they were able to protect the investors, they did relax, as they had done with the global liquidity. Hong Kong has been one of the countries that supports digital assets since 2022, and it even introduced Bitcoin and Ether-linked exchange-traded products and approved digital-asset funds. 

The SFC is finalizing the frameworks for the latest initiative to license crypto dealers and custodians. According to the latest information, in the future, regulators might allow locally licensed crypto brokers to access international liquidity pools. Mainstream media reports stated that if approved, the rule could open doors for firms like Binance and Coinbase to enter Hong Kong more easily through brokerage licenses instead of full exchange applications, which could take years to process. As per the latest statistics, 11 crypto exchanges currently hold full SFC licenses, whereas 49 brokers operate under omnibus account arrangements.     

The SFC Issues New Guidance for Licensed Virtual Asset Trading Platforms

The Securities and Futures Commission (SFC) has released two new circulars for SFC-licensed virtual asset trading platform operators to tap into the global liquidity and widen their product and service offerings. The Securities and Futures Commission – SFC press release stated that as set out in one of the circulars, the SFC allowed Platform Operators to combine their orders with those of affiliated overseas virtual asset trading platforms in a shared order book, thereby making its first step under Pillar A (Access) of the ASPIRe roadmap to attract global platforms, order flows, and liquidity providers. It added that with seamless cross-platform order matching and execution, Hong Kong investors stood to benefit from enhanced market liquidity and more competitive pricing, underpinned by robust safeguards to mitigate additional risks.  

Ms. Julia Leung said that making steady strides in market liquidity and business offerings was crucial to sustaining the growth momentum of Hong Kong’s digital asset ecosystem and that they were taking a significant step to connect with global liquidity, underscoring their commitment to striking the right balance in fostering market innovation and vitality while upholding high standards for investor protection and market integrity.
Ms. Julia Leung, the CEO of the Securities and Futures Commission (SFC), pointed out at the city’s flagship Fintech Week, and stressed that while building a sustainable digital asset ecosystem, improving the robustness of our financial infrastructure, and clearing and settlement through blockchain are the two methods to succeed. “A vibrant digital asset market requires a diverse range of products and services to attract different types of investors, as well as active market makers to provide liquidity”, she added.