By Zhang Hairong
1. Introduction
Among cities working towards an international hub of virtual assets, such as Dubai and Singapore, Hong Kong has been making efforts since 2017 to establish a comprehensive regulatory framework that encourages the development of virtual assets while mitigating the risks associated with the sector.
Hong Kong has achieved fruitful results since then: it has been among the first jurisdictions to put in place a regulatory framework for stablecoin issuers with its regulatory update being the implementation of the Stablecoins Ordinance on 1 August 2025 (Legislative Council, 2025a).
This article provides a brief overview of Hong Kong’s regulatory landscape for virtual (and digital) assets, highlighting the key principles, definitions, and current frameworks governing this fast-evolving sector.
2. Regulatory Principles
Hong Kong aligns its regulatory approach to supervising virtual assets–related activities with international standards, following the principle of “same business, same risk, same rules” (Financial Services and the Treasury Bureau, 2022).
Under such a regulatory principle, the virtual assets sector should be subject to equivalent regulation to that of the traditional financial sector, while also considering the unique features and potential financial risks of virtual assets.
3. Defining Virtual Assets under the Hong Kong Regulatory Framework
Definition of virtual assets can be found in section 53ZRA of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) (Legislative Council, 2025b) in Hong Kong. Under the AMLO, a virtual asset is a cryptographically secured digital representation of value expressed as a unit of account or a store of economic value used for payment of goods or services, discharge of debts, investment, or access to management on the cryptographically secured digital representation of value affairs, and can be electronically transferred, stored, or traded. While the AMLO excludes certain digital representations of value from the definition of virtual assets if they:
(a) are issued by a central bank (or the same functional entities, such as central bank digital currencies or digital representations of fiat currencies)
(b) are issued by a government (or the same functional entities, such as digital representations of the government’s consumption vouchers)
(c) have a limited-purpose digital token (such as a token for game use)
(d) constitute securities or a future contract
(e) constitute any floats or stored value facility deposits as defined by the Payment Systems and Stored Value Facilities Ordinance (PSSVFO).
Moreover, both the Securities and Futures Commission (SFC) and the Secretary for Financial Services and the Treasury can declare, via the Government of Hong Kong Special Administrative Region Gazette (Gazette), whether a digital representation qualifies as a virtual asset. The Gazette is an official channel for promulgating information such as legislation, public notices, and appointments for the public.
It is worth mentioning that in its Policy Statement 2.0 on the Development of Digital Assets in Hong Kong published in June 2025, the Government stated that the term “Digital Assets” would be used in place of “Virtual Assets” to better reflect the nature of this asset class and to align with international understanding (Financial Services and the Treasury Bureau, 2025). However, the Policy Statement 2.0 did not specify the definition or scope of the term “Digital Assets.” Later, the SFC issued a circular titled “Circular on expansion of products and services of virtual asset trading platforms” clarified that “Digital Assets” include several categories:
(a) Virtual assets as defined under the AMLO;
(b) Tokenized securities, which are traditional financial instruments recognized as “securities” under the Securities and Futures Ordinance (SFO) (see Schedule 1, Part 1, Section 1) but represented and traded using distributed ledger technology (DLT)—a system that records transactions across a decentralized network of computers, ensuring transparency and immutability; and
(c) Stablecoins, which are crypto-assets designed to maintain a stable value relative to a reference asset or currency (Securities and Futures Commission, 2025).
Based on the clarification, the term “Digital Assets” bears a wider meaning than the term “Virtual Assets.”
4. The Regulatory Regimes of Virtual Assets under the Hong Kong Regulatory Framework
Currently, other than AMLO, two other main ordinances govern virtual assets-related activities in Hong Kong: the Securities and Futures Ordinance (SFO) (Legislative Council, 2025c) and the Stablecoins Ordinance (SO) (Legislative Council, 2025a). In Hong Kong, the term “ordinance” means primary legislation similar to an “act” in other common law jurisdictions. An ordinance is a statutory law passed by the Legislative Council in Hong Kong and is a part of the “laws of Hong Kong.”
The SO is specifically used for Regulated Stablecoin Activity in Hong Kong, which includes the following:
(a) issuing a specified stablecoin in Hong Kong in the course of business;
(b) issuing a specified stablecoin outside Hong Kong in the course of business where the stablecoin purports to maintain a stable value with reference—wholly or partly—to the Hong Kong dollar (HKD); or
(c) carrying on any other activity designated by the Monetary Authority.
The SFO and AMLO are incorporated a dual licensing regime for virtual asset activities in Hong Kong.
(1) Regulation by the SFO
If a virtual asset constitutes a security or futures contract (as such terms are defined in the SFO), it will also be regulated under the SFO. Characteristics that render a virtual asset a security being regulated by the SFO include:
(a) it might represent equity or ownership interests in a corporation, i.e. it is a “share”;
(b) it might represent a debt or liability, i.e. it is a “debenture”; or
(c) its proceeds might be managed on a collective basis and invested for profit and so constitute a Collective Investment Schemes (“CIS”).
Where a virtual asset is a security, the usual laws and regulations applicable to securities will apply and act undertaken in relation to it will fall within the ambit of the SFC’s statutory powers. This includes Hong Kong’s prospectus law, which only applies to shares and debentures as such terms are defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (CWUMPO) (shares and debentures are forms of securities as defined in the SFO).
Otherwise the above, the virtual asset will mainly be regulated under the AMLO.
For example, currently, the license for a virtual asset trading platform (“VATP”) depends on the type of virtual assets traded:
(a) If a platform trades one or more virtual assets that qualify as “securities” under the Securities and Futures Ordinance (SFO), it must obtain Type 1 (Dealing in Securities) and Type 7 (Providing Automated Trading Services) licenses under section 116 of the SFO to operate legally. For operators that already hold a Type 1 license, they must upgrade their license if they plan to include activities involving virtual assets classified as securities.
(b) Separately, if the platform trades virtual assets that are not securities under the SFO but instead fall within the definition of “virtual assets” under section 53ZRA of the AMLO, it must obtain a license for providing a virtual asset service under section 53ZRK of the AMLO.
However, in December 2025, the Financial Services and the Treasury Bureau (FSTB) and the SFC jointly launched a consultation conclusions on legislative proposal to regulate dealing in virtual assets and further public consultation on legislative proposal to regulate virtual asset advisory service providers and virtual asset management service providers (Financial Services and the Treasury Bureau and Securities and Futures Commission, 2025) in which a new proposed regulatory framework will be introduced to regulate virtual assets activities under AMLO. In the new proposed regulatory framework, four (4) new licensing regimes will be respectively introduced for regulating virtual asset dealing services, virtual asset custodian services, virtual asset advisory service providers and virtual asset management service providers. Currently, under AMLO, only licensing regime for VATPs. Together with the new licensing regime, under the AMLO, the regulatory framework will be more comprehensive. The FSTB and the SFC will finalize the legislative proposals under the AMLO, with a view to introducing a bill into the Legislative Council in 2026.
The regulatory framework has been developing with the demand of the market. In April 2026, The SFC launched a new regulatory framework to pilot the secondary trading of tokenized products which are authorized by SFC, aiming to promote the liquidity of the tokenized products. Tokenized money market funds are expected by the first batch of products which can be traded in secondary market under the new regulatory framework (Securities and Futures Commission, 2026).
Conclusion
Hong Kong has been developing a comprehensive regulatory framework to oversee virtual asset–related activities and ensure investor protection while supporting the healthy growth of the industry. This framework establishes specific regulatory regimes for key market participants, including virtual asset trading platform operators, fund managers, intermediaries that deal in, advise, provide custodian services on virtual assets, intermediaries that distribute virtual asset–related products, and stablecoin issuers engaged in regulated activities.
While Hong Kong’s approach is robust, it continues to evolve alongside industry developments and global regulatory trends. As such, all market participants must remain vigilant, compliant, and informed of the latest regulatory updates and requirements.