On November 3, 2025, the SFC issued a circular expanding the product and service offerings of licensed virtual asset trading platforms ("VATPs") in Hong Kong. This includes modified token admission requirements, clarification on distributing tokenised securities and investment products, and updates on custody services for digital assets not traded on VATPs.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Summary of Circular to Virtual Asset Trading Platforms (VATPs) on Licensing Process and Revamped Second-phase Assessment
The latest SFC circular outlines an updated licensing process for virtual asset trading platforms (“VATPs”) including the new Second-phase Assessment procedures
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On November 3, 2025, the Securities and Futures Commission ("SFC") of Hong Kong issued a circular to expand the product and service offerings of licensed virtual asset trading platforms ("VATPs"). The initiative aims to foster the development of the digital asset ecosystem while meeting diverse investor needs and ensuring robust protections for retail investors.
The circular introduces changes to the requirements for virtual assets, including stablecoins. By lifting the 12-month track record requirement, it allows professional investors to be offered these assets. Notably, this change does not apply to tokenised securities, which are governed by different regulatory frameworks. Additionally, stablecoins issued by licensed stablecoin issuers can be offered to retail investors without the 12-month track record requirement.
The SFC emphasizes the importance of VATPs performing reasonable due diligence on virtual assets before including them for trading. Adequate disclosures must be made for virtual assets with less than 12 months of track record. The 12-month track record requirement remains applicable for retail investor offerings of other virtual assets.
The circular proposes amendments to the licensing conditions, permitting VATPs to distribute digital asset-related products and tokenised securities in accordance with existing laws. VATPs can also open trust or client accounts with the custodians of these products on behalf of their clients. VATPs are encouraged to submit applications to the SFC for approval of these modifications.
The SFC acknowledges that certain VATPs may wish to offer custody services for digital assets not traded on their platforms. To facilitate this, the SFC allows VATPs to apply to modify their licensing conditions, provided they comply with the VATP Guidelines and existing regulatory requirements. VATPs must demonstrate effective risk management measures and complete the second-phase assessment before offering custody services for digital assets other than tokenised securities not offered for trading.
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