Introduction
On December 17, 2024, Bitcoin soared to a historic high, surpassing $100,000 and igniting global market euphoria. Over the past decade, Bitcoin has consistently outperformed traditional assets in annual returns for eight years.
As an international financial hub, Hong Kong has embraced innovation in virtual assets with progressive policies. The Hong Kong government's 2024–2026 Strategic Priorities highlighted crypto-centric technological innovation as a key focus, reinforcing its commitment to this sector.
2024 witnessed accelerated approvals for virtual asset platforms, the launch of six spot ETFs, and an influx of capital from brokers and asset managers—signaling Hong Kong's thriving virtual asset ecosystem.
Accelerated Licensing: 7 Virtual Asset Exchanges Approved
Regulatory Framework
On June 1, 2024, Hong Kong's Virtual Asset Service Provider (VASP) licensing regime took effect. All operational trading platforms must obtain licenses from the Securities and Futures Commission (SFC) under the Anti-Money Laundering Ordinance (AMLO). Platforms must hold:
- Type 1 (Securities Trading) and Type 7 (Automated Trading Services) licenses under the Securities and Futures Ordinance.
- AMLO License for virtual asset trading.
Key Milestones
- OSL and HashKey became the first fully licensed platforms, securing AMLO approval in April and May 2024.
- HKVAX received the third VASP license on October 3, 2024, joining OSL (2020) and HashKey (2022).
- December 18, 2024: SFC granted licenses to four additional platforms—HKbitEX, Accumulus, DFX Labs, and EX.IO—bringing the total to seven.
Expedited Licensing Process
The SFC introduced a three-step rapid approval process:
- On-site inspection and corrective action consensus.
- Conditional licensing with restricted operations.
- External evaluation by appointed experts, followed by full licensing.
Breakthrough in ETFs: 6 Spot ETFs Reach $487M in Assets
Asia’s First Spot ETFs
On April 24, 2024, Hong Kong approved six virtual asset spot ETFs, including the world’s first Ethereum spot ETFs, underscoring its leadership in crypto innovation.
Trading Performance
- April 30, 2024: ETFs debuted on HKEX, with first-day trading volume nearing $10 million across HKD, USD, and RMB counters.
By January 16, 2025:
- Bitcoin ETFs surged over 50%.
- Ethereum ETFs gained ~5%.
- Total AUM: $487 million.
Institutional Influx: 31 Brokers and 36 Asset Managers Enter Market
Broker Participation
- 31 brokers upgraded to Type 1 licenses, enabling virtual asset trading via omnibus accounts.
Asset Management Expansion
- 36 asset managers enhanced Type 9 licenses to allocate >10% to virtual assets.
RWA Tokenization: Bridging Digital and Real-World Assets
What Is RWA?
Real World Asset (RWA) tokenization converts tangible asset rights into blockchain-based digital tokens, facilitating ownership transferability.
Hong Kong’s Initiatives
- March 2024: Launched Ensemble Project for wholesale CBDC and tokenized deposits.
- August 2024: Ensemble Sandbox debuted, testing four tokenized asset use cases with partners like HSBC, HashKey, and Microsoft.
FAQ
1. What licenses are required for virtual asset exchanges in Hong Kong?
Platforms need Type 1, Type 7, and AMLO licenses under SFC oversight.
2. How have Bitcoin ETFs performed in Hong Kong?
As of January 2025, Bitcoin ETFs delivered 50%+ returns, while Ethereum ETFs saw ~5% gains.
3. What is RWA tokenization?
It’s the process of digitizing real-world assets (e.g., bonds, real estate) on blockchain for enhanced liquidity and transparency.
4. Which institutions joined Hong Kong’s RWA sandbox?
Key participants include HSBC, HashKey, and Microsoft Hong Kong, among others.
5. How many virtual asset ETFs are available in Hong Kong?
Six spot ETFs (3 Bitcoin, 3 Ethereum) are currently listed on HKEX.
6. What’s next for Hong Kong’s virtual asset market?
Expect faster licensing, more ETF varieties, and RWA scalability through sandbox testing.
Disclaimer: This content is for informational purposes only and does not constitute financial advice.