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Hong Kong working to become Asian digital asset hub

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Financial regulator to launch new licensing regimes

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Analysts see city's push as clue to China's plans

By Summer Zhen and Jiaxing Li

HONG KONG, Feb 19 (Reuters) - Hong Kong is expanding the

ways investors can trade virtual assets, its financial regulator

said on Wednesday, as the city races to become Asia's digital

assets hub and attract capital.

The Securities and Futures Commission will establish new

licensing regimes for over-the-counter trading in virtual assets

and for custody services, aiming to boost market efficiency and

investor protections, it said in an statement on Wednesday.

Derivative trading and margin financing options for virtual

assets are also under review, the regulator said, after its CEO

Julia Leung announced the measures at CoinDesk's Consensus Hong

Kong 2025 conference earlier.

Hong Kong first drew up a plan to become a virtual asset

trading centre in 2022 - an effort that followed Beijing's

sweeping ban on all cryptocurrency transactions in mainland

China the previous year.

It has since launched the first spot crypto exchange-traded

funds in Asia, and issued nine virtual asset trading platform

(VATP) licences, Paul Chan, the city's financial secretary said

at the conference.

Regulators are also advancing on the regulation of

stablecoins and have introduced the relevant legislation to

facilitate further innovation, he added.

These initiatives "reflect our commitment to building a

thriving digital asset ecosystem", Chan said.

Bullish Group, which owns crypto news website CoinDesk, said

it had became the 10th licensed crypto exchange in the city on

Tuesday.

Consensus Hong Kong is the first major crypto industry

gathering since U.S. President Donald Trump took office last

month, and speakers expressed a bullish view on the regulatory

environment.

"There's a big shift in sentiment in the U.S.," said Richard

Teng, chief executive of Binance Holdings.

He said some sovereign wealth funds and institutional

investors have gone from debating whether they should invest in

crypto to considering how much they should invest.

The price of bitcoin more than doubled last year. It

hit an all-time high of $109,071 on January 20 this year, the

day of Trump's inauguration, but has since pulled back to stand

at about $96,000.

Hong Kong's push into crypto is seen by some as offering a

clue to Beijing's exploration of virtual asset regulations, at a

time when the new crypto-friendly U.S. administration is

drafting new regulations and exploring a national reserve to

promote the industry.

"I think Hong Kong's particular role for China, not just in

crypto but overall, is that it's one country, two systems," said

Lawrence Chu, co-founder and CEO of digital asset firm IDA.

"We're here to play that role, to be a sandbox, maybe in

some cases for China, but also to be a conduit for various

activities."