Hong Kong’s SFC Sets a Measured Path for Virtual Asset Trading

SFC virtual assets policy has moved from roadmap to delivery in 2026. The Securities and Futures Commission (SFC) now counts 13 licensed virtual asset trading platforms, has issued conduct requirements for stablecoin services, and fined a licensed intermediary HK$4 million for failing to assess clients properly before selling virtual asset products.¹ ²

In April, Dr Eric Yip, the SFC's Executive Director (Intermediaries), told the Hong Kong Web3 Festival 2026 that "progress is measured not by announcements, but by delivery and by results."³ The SFC's guiding principle remains "same business, same risks, same rules", so the standards firms apply to traditional products are expected to apply to virtual assets as well.³

For compliance teams, the practical question is whether those controls can be evidenced. Client suitability, product governance and the personal trading of staff in virtual assets all sit inside that question.

An Overview of Hong Kong's SFC Virtual Assets Framework

Hong Kong regulates virtual asset trading mainly through the SFC, which licenses virtual asset trading platforms and applies established securities market conduct standards to virtual asset activity. The guiding principle is "same business, same risks, same rules".³

The SFC's ASPIRe roadmap organises its work under five pillars, Access, Safeguards, Products, Infrastructure and Relationships, across 12 initiatives.⁴ Dr Yip described the delivery approach in his April keynote as "We progress through execution, innovate through practice, and develop through patience."³

The Hong Kong Monetary Authority (HKMA) sits alongside the SFC as the stablecoin regulator. On 10 April 2026, the HKMA confirmed its first two stablecoin issuer licences.⁵ The SFC then set out how licensed platforms and corporations should handle those stablecoins in a May 2026 circular.⁶

What the SFC Has Delivered for Virtual Assets in 2026

The SFC's licensed platform count rose from 12 at 31 March 2026 to 13 in its April to June quarterly report.¹ ⁷ The SFC also published several practical requirements over the same period.

Most relevant to day-to-day compliance is a circular dated 27 May 2026 on stablecoins issued under an HKMA licence. It requires written notice to the SFC before a platform admits, suspends or removes one, and suitability requirements still apply where a firm solicits or recommends.⁶ In the same quarter, a framework opened secondary trading of tokenised SFC-authorised funds on licensed platforms, and a circular reminded licensed corporations and platforms to maintain robust cybersecurity frameworks in light of frontier AI risks.¹

On licensing, the SFC and the Financial Services and the Treasury Bureau concluded their joint consultation on virtual asset advisory and management providers, and will finalise legislative proposals for dealing, custody, advisory and management regimes.¹

What "Same Business, Same Risks, Same Rules" Means for Firms

The principle applies to conduct as well as to products. Securities firms already supervise staff dealing through pre-clearance, holdings reports and conflict checks. Firms should expect the SFC to look for the same evidence where staff hold or trade virtual assets.

For clients, suitability and knowledge assessments need to cover virtual asset products in the same way they cover other complex products.²

Governance matters as well. Written policies need owners, approvals, and records showing how each control operated, because a policy that cannot be evidenced offers little protection in an inspection. Staff conduct completes the picture, since employee wallets, exchange accounts and trades in virtual assets need disclosure and review within the same framework as traditional securities.

Supervision now reaches across borders and agencies as well. The SFC has signed its first memorandum of understanding with an overseas regulator, the UAE Capital Market Authority, on supervising digital asset entities, and it works with the Police through a joint working group on illegal activity involving trading platforms.⁷

SFC Enforcement Example: Virtual Asset Suitability Failures

Reprimand and HK$4 million fine (SFC, announced 6 January 2026)

The SFC reprimanded and fined a licensed securities firm for breaches in how it distributed virtual asset-related products to clients. The firm identified the issue in November 2022 and reported it to the SFC.² Over the period concerned, it offered 32 virtual asset products, all classified as complex, and executed 1,446 transactions in them for 136 clients, 130 of whom were retail.²

The weaknesses exist in basic onboarding. The firm's online suitability test contained no questions on virtual asset knowledge, and it relied on clients' self-declared derivatives knowledge instead of testing their understanding of virtual assets.² Its warning statements also made no reference to virtual asset exposure or to risks such as price volatility, manipulation and cybersecurity.²

For firms, the lesson is that the SFC applied its existing conduct rules to a new asset class. An onboarding process built for other products was not treated as adequate for virtual assets, so controls designed for traditional products should be tested against virtual assets before relying on them.

Prediction Markets and Hong Kong's Investor Education Warning

Hong Kong has not banned Polymarket, but it has issued a warning. A third-party ban tracker lists trading there as warned, rather than blocked.⁹ On 17 April 2026, the Investor and Financial Education Council (IFEC), which is linked to the SFC, cautioned that trading on prediction markets "may constitute illegal gambling" and does not carry the protection of securities law.⁸ Firms with Hong Kong staff should decide whether employee activity in prediction markets is permitted, restricted or prohibited under personal trading policy, and require disclosure of the accounts involved.

Where Hong Kong's Virtual Asset Regulation Is Heading Next

The next phase brings more firms into scope. Licensing proposals for virtual asset dealing, custody, advisory and management are being finalised, so more firms will fall under supervision, and more of their staff will hold virtual assets personally.¹

Dr Yip framed Hong Kong's ambition as moving "from a local focus to global influence".³ Cross-border coordination, such as the SFC's memorandum of understanding with the UAE, points the same way.⁷ Firms operating in several jurisdictions can expect similar questions about evidence from different supervisors.

The practical response is to map each SFC expectation to a named owner, an approval and a retrievable record. The exercise should include staff virtual asset activity, not only client-facing products.

How MCO Supports Virtual Asset Personal Trading Oversight in Hong Kong

How firms operationalise these expectations will increasingly matter. A personal trading policy that covers virtual assets only works if the firm can see which wallets and exchange accounts staff hold, and what they traded.

MCO (MyComplianceOffice) addresses that need through its Crypto and Digital Asset Trading Employee Compliance solution. The solution provides automated wallet discovery, captures on-chain activity and aggregates holdings across multiple chains, so compliance teams can detect conflicts and show supervisors how oversight operated. Disclosures, approvals and reviews sit in one record alongside traditional securities, which keeps the SFC's "same rules" principle practical for staff as well as clients.

For firms in Hong Kong, a simple test applies. If the SFC asked how the firm oversees staff trading in virtual assets, could the team produce the records promptly?

 If you are ready to help your firm meet evolving regulatory expectations, see the MCO complete compliance suite in action now. 

 Also, see our in-depth crypto regulation compliance article which includes the latest updates across Singapore, Japan, the United States, United Kingdom, and more.