rewrite this title Hong Kong’s SFC Publishes ‘ASPIRe’: New Regulatory Roadmap Shaping City-State’s Market Future

Hong Kong Securities and Futures Commission (SFC) announced the release of its new “ASPIRe” roadmap, which outlines 12 key initiatives aimed at streamlining market access, creating adaptive compliance and product frameworks, and upgrading infrastructure to combine the reliability of traditional finance (TradFi) with the efficiency of blockchain technology. This approach highlights Hong Kong’s strategic efforts to establish itself as a trusted hub for virtual asset liquidity.

Pillar A, titled “Access,” focuses on building an inclusive ecosystem by aligning regulatory standards with global participation. The SFC aims to attract qualified participants, expand investor options, and integrate Hong Kong more deeply with global liquidity. The key goals of Pillar A include expanding market access by developing clear licensing frameworks for compliant Virtual Asset Service Providers (VASPs) to enter the market easily, encouraging responsible participation by creating transparent pathways for a range of stakeholders, including global platforms and liquidity providers, and enhancing investor opportunities by broadening access to regulated services to improve market efficiency, price discovery, and innovation.

Over-the-counter (OTC) remains a vital method for executing large-volume transactions, allowing buyers and sellers to conduct block trades without impacting market prices. The SFC plans to support the HKSAR Government’s introduction of a dedicated licensing framework for OTC trading to address existing gaps in the current regulatory regime. Consultations with stakeholders have emphasized the essential role of OTC desks in providing liquidity and facilitating institutional participation. By applying the “same business, same risks, same rules” principle, the SFC will ensure that OTC operators are subject to the same regulatory requirements as Virtual Asset Trading Platforms (VATPs), fostering fair competition while mitigating risks like money laundering and market manipulation.

In addition, the SFC is working on establishing a licensing framework for custodians, recognizing their crucial role in safeguarding client assets. This framework will introduce a two-tier market structure that separates trading and custody functions. The new regime will align with the standards applied to traditional financial custodians, covering areas like capital adequacy, cybersecurity, and asset segregation. Legislative preparations, led by the HKSAR Government with input from regulators, are expected to be completed by the end of 2025.

Given that virtual asset trading is inherently borderless and liquidity is dispersed across various global liquidity pools, the SFC encourages major international virtual asset platforms to set up operations in Hong Kong. This will allow them to leverage their global order books while adhering to local compliance standards. Such integration will provide local investors with access to global markets and attract institutional liquidity to Hong Kong, further developing a deeper and more liquid market.

ASPIRe: Strengthening Security, Competitiveness, And Market Access For Virtual Assets In Hong Kong

Pillar S, representing Safeguards, is designed to foster a secure and competitive virtual asset ecosystem by aligning compliance standards with global best practices. This approach balances regulatory rigor with market competitiveness, ensuring that requirements are both flexible and outcome-driven. By providing clear guidelines and proportional oversight, Pillar S aims to enhance investor protection while supporting sustainable industry growth.

The framework prioritizes aligning compliance requirements with core regulatory objectives such as asset security and market integrity while still allowing market participants the flexibility to implement innovative technologies and operational controls. It adopts a risk-proportionate oversight model, tailoring compliance obligations to the specific risk profiles of different market participants. This ensures systemic stability while avoiding unnecessary restrictions on innovation. Additionally, it promotes regulatory clarity by integrating virtual asset compliance with traditional financial frameworks, reducing uncertainty and minimizing operational inefficiencies. Through these measures, the SFC aims to create a regulatory environment that protects investors while encouraging responsible growth in the virtual asset sector.

Pillar P is centered on broadening the availability of virtual asset products and services within Hong Kong’s regulated market, ensuring they are tailored to meet the varying needs of different investor groups. The SFC aims to introduce investment tools that align with investors’ risk tolerance and experience levels, promoting market development while maintaining safeguards to protect retail participants. This balanced regulatory approach encourages innovation while minimizing potential risks.

A key focus of this initiative is to facilitate the introduction of more sophisticated investment products that cater to investors with different levels of expertise. At the same time, strong protective measures will be put in place to ensure that retail investors are not exposed to risks they may not fully understand. Additionally, the framework will incorporate comprehensive strategies to mitigate potential risks such as fraud, conflicts of interest, and market manipulation. By implementing these safeguards, Pillar P seeks to support a dynamic yet secure investment environment that fosters responsible participation in the virtual asset sector.

ASPIRe: Strengthening SFC Oversight Of Virtual Asset Market And Empowering Stakeholders Through Transparent, Fact-Based Information Sharing 

Pillar I focuses on enhancing the SFC ability to oversee the virtual asset market by leveraging advanced technology and developing reliable infrastructure. The goal is to strengthen cross-agency collaboration and establish a comprehensive framework for monitoring and detecting risks, misconduct, and illicit activities within the region.

A key aspect of this initiative is improving market-wide surveillance by increasing visibility across VASPs and identifying potential risks and irregularities. By investing in cutting-edge data analytics and early warning systems, the SFC aims to detect illicit activities at an early stage, allowing for proactive intervention. Additionally, investor protection remains a priority, with measures designed to safeguard assets both before and after any potential incidents. Through a combination of technology-driven oversight and collaborative regulatory efforts, Pillar I seeks to create a more secure and transparent virtual asset ecosystem.

Pillar Re is designed to empower both investors and industry participants by promoting transparent, fact-based information sharing. The goal is to equip the public with the necessary knowledge to navigate the complexities and risks of virtual assets, fostering a well-informed community capable of engaging responsibly with the evolving market. Additionally, by ensuring that industry stakeholders have a clear understanding of regulatory developments, the SFC aims to create a collaborative environment where businesses can contribute constructively to shaping policies.

A core objective of this initiative is enhancing investor awareness, ensuring that retail participants fully comprehend the features and risks associated with virtual assets before making investment decisions. Simultaneously, industry engagement is encouraged, allowing stakeholders to provide insights that help refine regulatory frameworks. Transparency in policymaking remains a priority, ensuring that regulations are both accessible and aligned with market needs while achieving intended regulatory outcomes.

The SFC’s Regulatory Roadmap reflects a forward-thinking approach to addressing the challenges of the virtual asset market. Success will require a balanced effort from all participants—regulators must carefully manage innovation while maintaining market integrity, institutions must prioritize long-term stability over short-term speculation, and retail investors must approach the space with informed caution.

About The Author

Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

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Alisa Davidson

Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

More articles