Hong Kong Opens Global Liquidity to Licensed Crypto Exchanges

Hong Kong's Securities and Futures Commission (SFC) announced on Monday at Hong Kong Fintech Week that licensed crypto exchanges will be allowed to connect their local entities with global order books, ending the previous isolated trading model that confined trades within the city.

This regulatory change, detailed in a circular expected later that day, aligns digital asset rules with traditional financial products and is part of a broader strategy to attract crypto firms. Julia Leung, CEO of the SFC, emphasized that the move follows assurances on investor protection, stating, "Once we are sure that we are able to protect investors, we do relax — as we did with global liquidity."

Since 2022, Hong Kong has rolled out a comprehensive licensing regime for exchanges, introduced Bitcoin and Ether-linked exchange-traded products (ETPs), and approved digital-asset funds. However, trading activity has lagged behind global leaders like the United States, where regulatory stances have been more favorable.

The SFC is also finalizing new frameworks for licensing crypto dealers and custodians, while the Hong Kong Monetary Authority plans to issue the first stablecoin licenses next year. In future phases, regulators may permit locally licensed crypto brokers—not just exchanges—to access international liquidity pools, potentially easing entry for global firms like Binance and Coinbase through brokerage licenses instead of full exchange applications, which can take years to process.

Currently, 11 crypto exchanges hold full SFC licenses, and 49 brokers operate under omnibus account arrangements. The SFC will ease listing rules for new tokens and HKMA-approved stablecoins, removing the 12-month track record requirement for professional investors.

Hong Kong's new "LEAP" framework focuses on legal clarity, ecosystem growth, real-world adoption, and talent development, with a stablecoin licensing regime set to launch on August 1. The government also plans to regulate tokenized government bonds and ETFs, expanding tokenization efforts into sectors like metals and renewable energy, such as gold and solar panels.