The Hong Kong Securities and Futures Commission (SFC) has rolled out new regulations that allow licensed virtual asset brokers to broaden their service offerings. This significant update introduces provisions for financing crypto trading using a wider array of collateral. It also marks the official approval for crypto margin financing and perpetual trading within Hong Kong, while expanding the operational scope for affiliated market-making activities.
This regulatory shift indicates a unified strategy for regulated involvement in virtual assets, paving the way for intermediaries who already possess SFC licenses to actively participate in the digital asset sector. The initiative aims to incorporate crypto-related activities into the established regulatory framework, aligning closely with the Hong Kong Monetary Authority (HKMA).
According to insights from Sidley Austin, these reforms follow a “same activity, same risk, same rules” philosophy, which enhances parity with traditional financial markets. This approach elevates governance standards for those intermediaries involved in virtual asset transactions. With an increased focus on risk management, brokers will be required to implement strict collateral standards, conservative haircuts, and disclosures that are consistent with securities margin lending practices. Moreover, enhanced custody measures, the segregation of client assets, and robust anti-money laundering (AML) and counter-terrorism financing (CTF) controls are seen as essential safeguards, even as the guidelines aim to promote greater liquidity.
The balance in policy development targets both market growth and regulatory discipline. Licensed brokers will have to undertake immediate operational adjustments, such as revising margin policies, managing collateral effectively, updating client documentation, and ensuring connections with compliant liquidity providers. The pace of implementation will hinge on the brokers” internal preparedness and the feedback from regulatory authorities.
Additionally, the expanded scope for collateral could improve balance-sheet efficiency but necessitates a heightened emphasis on real-time risk monitoring and stress testing. For clients, their access will depend on specific eligibility requirements and comprehensive product risk disclosures. The availability of complex derivatives like perpetual contracts will also be contingent on detailed regulatory supervision and rules.
At the time of this update, bitcoin is trading near $66,906, a figure that underscores the ongoing volatility as brokers adjust their haircuts and concentration limits accordingly.
Under this new framework, licensed brokers are now enabled to venture into crypto margin financing, offer perpetual contracts within set regulatory parameters, and facilitate market-making through affiliated entities where permissible. Execution channels are expected to comply with licensing and disclosure mandates. Julia Leung, CEO of the SFC, has confirmed that brokers may utilize bitcoin and ether as acceptable collateral for margin financing, provided they adhere to prudent haircut standards akin to those used in securities.
“Virtual assets have become a tool in the race for financial supremacy,” remarked Julia Leung, emphasizing that the broader supervisory aim is to achieve parity between banking and securities oversight as virtual asset activities converge. As the complexity of products increases, so too will the necessary controls.
For investors seeking clarity, the new guidelines indicate that both BTC and ETH can be used as collateral, accompanied by conservative haircuts and controls akin to those found in securities margin lending. Initially, perpetual contracts are expected to be available exclusively to professional investors, as reported by China Daily Hong Kong.
