Circular on provision of Relevant Stablecoin service by virtual asset trading platforms and licensed corporations

Regulatory Framework and Scope

On May 27, 2026, the Securities and Futures Commission ("SFC") issued a circular setting out expected standards for licensed virtual asset trading platforms ("VATPs") and licensed corporations when conducting activities in Relevant Stablecoins. This circular clarifies the application of the Guidelines for Virtual Asset Trading Platform Operators (VATP Guidelines) and the Joint circular on intermediaries’ virtual asset-related activities to activities in Relevant Stablecoins. For the avoidance of doubt, this circular does not apply to activities involving stablecoins which are not Relevant Stablecoins.

Definition of Relevant Stablecoins

Following the commencement of the Stablecoins Ordinance (Cap. 656) ("SO") on 1 August 2025, the Hong Kong Monetary Authority ("HKMA") established a regulatory framework for the issuance of stablecoins in Hong Kong, and granted stablecoin issuer licences to two entities under the SO on 10 April 2026. Relevant Stablecoins refer to those that (i) qualify as “specified stablecoins” under section 4 of the SO and (ii) are issued by an entity licensed under the SO and are authorised under such licence. The SFC recognises that the nature and risk profile of Relevant Stablecoins differ from other virtual assets.

Regulatory Requirements for Trading Platforms

Regulatory requirements relating to Relevant Stablecoins applicable to VATPs and licensed corporations include: Liquidity and index requirements for tokens available for trading by retail clients are not necessary for Relevant Stablecoins as they are subject to HKMA’s oversight; Disclosure should include material information about the Relevant Stablecoins’ stabilisation mechanism and redemption arrangements; Assessment of knowledge of virtual assets is not required for Relevant Stablecoin-only clients; Exposure limit for each client does not include holdings of Relevant Stablecoins; Ensuring suitability applies as per existing requirements where a solicitation or recommendation is made.

Operational Arrangements for Licensed Corporations

Regulatory requirements relating to Relevant Stablecoins applicable to licensed corporations include: Partnering arrangement allows licensed corporations to partner with an HKMA-licensed stablecoin issuer of a particular Relevant Stablecoin; Dealing through VATPs permits licensed corporations to partner with VATPs subject to a professional investor-only licensing condition (PIO condition) for retail clients via omnibus accounts; Deposit and withdrawal arrangement permits licensed corporations to receive or withdraw clients’ Relevant Stablecoins through segregated account(s) with the relevant HKMA-licensed stablecoin issuer.

Reporting and Compliance Obligations

Ongoing reporting and notification: VATPs and licensed corporations are not required to obtain the SFC’s prior written approval in advance of any plan or proposal to include any Relevant Stablecoin for their clients’ trading. Nevertheless, they should notify the SFC in writing in advance of any plan or proposal to admit, suspend or remove any Relevant Stablecoins for their clients’ trading. For licensed corporations the licences of which have not been imposed with the relevant licensing conditions for the provision of virtual asset-related services, they should follow the existing licensing procedures to modify their relevant licensing conditions before commencing any virtual asset-related activities. VATPs and licensed corporations should review and update their internal policies, procedures and disclosures to ensure compliance with the requirements set out in this circular. The revised licensing conditions for VATPs are detailed in Appendix 1.

Definitions and Regulatory References

1. “VATPs” means: (a) a corporation which is granted a licence for Type 1 (dealing in securities) and Type 7 (providing automated trading services) regulated activities under section 116 of the Securities and Futures Ordinance (Cap. 571) ("SFO"); and (b) a corporation which is granted a licence for providing a VA service under section 53ZRK of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615). VATPs which are deemed-to-be-licensed are excluded from the meaning of VATPs in this circular. The list of deemed-to-be-licensed VATPs can be found on the SFC’s website. 2. Joint circular on intermediaries’ virtual asset-related activities issued by the SFC and the HKMA on 22 December 2023, as supplemented by the Supplemental joint circular on intermediaries’ virtual asset-related activities on 30 September 2025. For corresponding requirements on the provision of Relevant Stablecoin services by registered institutions, please refer to HKMA’s circular on Virtual asset-related activities in relevant stablecoins issued by licensed stablecoin issuers issued on 27 May 2026. 3. Please refer to paragraphs 7.7 and 7.8 of the VATP Guidelines and paragraphs 20(a)(iv) and 28 of the Joint Circular. 4. “Retail client” means any person other than a professional investor. “Professional investor” has the meaning as defined in section 1 of Part 1 of Schedule 1 to the SFO. 5. Please refer to paragraph 9.4 of the VATP Guidelines and paragraph 20(a)(i) of the Joint Circular. 6. “Institutional professional investors” is defined under paragraph 15.2 of the Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct) as persons falling under paragraphs (a) to (i) of the definition of “professional investor” in section 1 of Part 1 of Schedule 1 to the SFO. “Qualified corporate professional investors” refers to corporate professional investors which have passed the assessment requirements under paragraph 15.3A and gone through the procedures under paragraph 15.3B of the Code of Conduct. 7. For VATPs or licensed corporations that choose to provide Relevant Stablecoin-only service to certain clients, they should not provide services in any other virtual assets to such Relevant Stablecoin-only clients. Before the VATPs or licensed corporations provide services in any other virtual assets to Relevant Stablecoin-only clients, they should comply with all regulatory requirements applicable to the provision of such services, including, where the client is not an institutional or qualified corporate professional investor client, assessing each client’s knowledge of virtual assets. For the avoidance of doubt, VATPs and licensed corporations should comply with the requirement to assess a non-Relevant Stablecoin-only client’s knowledge of virtual assets irrespective of whether the client ultimately only trades in Relevant Stablecoins. 8. Please refer to paragraph 9.7 of the VATP Guidelines and paragraph 20(a)(ii) of the Joint Circular. 9. Please refer to paragraphs 9.17 to 9.21 of the VATP Guidelines and paragraph 27 of the Joint Circular. 10. Please refer to paragraph 17 of the Joint Circular. 11. Paragraph 20(a)(iii) of the Joint Circular provides that before providing VA dealing services to retail clients, intermediaries should ensure that the VA dealing activities are conducted through an omnibus account established and maintained with an SFC-licensed platform which is not subject to the licensing condition that it can only serve professional investors. 12. Please refer to paragraph 20(b) of the Joint Circular. 13. “Authorized financial institution” means an authorized institution as defined in section 2(1) of the Banking Ordinance. 14. Please refer to paragraphs 16.4 and 16.5 of the VATP Guidelines, and paragraph 31 of the Joint Circular.