Hong Kong Securities and Futures Commission new circular sends positive signals: exchanges can share listing books, and market depth may see a surge

Written by: Fintax

1. Introduction

On November 3, 2025, coinciding with the grand opening of “Hong Kong FinTech Week,” the Hong Kong Securities and Futures Commission (hereinafter SFC) simultaneously issued two milestone regulatory circulars — the “Circular on Shared Liquidity for Crypto Asset Trading Platforms” and the “Circular on Expanding Crypto Asset Trading Platform Products and Services.” The circular states that, subject to regulatory compliance and prior written approval, licensed crypto asset trading platforms may share order books with overseas compliant platforms to consolidate liquidity, while expanding platform product and service offerings, including providing short-term virtual assets to professional investors. This policy announcement was made during a gathering of tens of thousands of global FinTech professionals, with a clear strategic intent: Hong Kong is demonstrating unprecedented determination to position crypto assets as a key lever to strengthen its status as an international financial center. This article will explore the significance of the new circulars in the regulation and governance of the crypto economy, against the background of the SFC’s ASPIRe roadmap, and discuss their potential future impact on platforms, investors, and market structure.

2. Interpretation of the Circular Content

2.1 “Circular on Shared Liquidity for Crypto Asset Trading Platforms”

The “Circular on Shared Liquidity for Crypto Asset Trading Platforms” focuses on enhancing market liquidity under compliant conditions. It primarily permits licensed Virtual Asset Trading Platforms (VATPs) to share order books (order-books) with their overseas related platforms, forming a larger, more in-depth global liquidity pool. This aims to improve price discovery, increase trading efficiency, and reduce cross-regional price gaps.

The circular emphasizes strict settlement risk management, including the use of DVP (Delivery versus Payment) mechanisms, daily settlement, the establishment of compensation mechanisms, and ensuring the secure custody of customer crypto assets. Platforms are required to formulate legally binding rules for shared order books, establish cross-border market monitoring mechanisms, and fully disclose relevant risks and obtain explicit customer consent before providing such services, especially to retail investors.

Additionally, platforms must seek prior approval from the SFC, with corresponding terms and conditions incorporated into their licenses. The core of this circular is to enable licensed virtual asset trading operators to integrate order books with qualified overseas operators, forming a shared liquidity pool to facilitate cross-platform order matching and trade execution. This mechanism mandates the adoption of DVP settlement, intraday settlement and position limits monitoring, and the establishment of a reserve fund and insurance or compensation arrangements of no less than the upper limit to cover settlement asset risks. Market supervision must be unified, with the ability to provide real-time transaction and customer data to the SFC, and full risk disclosures and customer confirmation of participation are required before offering services to retail investors.

2.2 “Circular on Expanding Crypto Asset Trading Platform Products and Services”

The “Circular on Expanding Crypto Asset Trading Platform Products and Services” focuses on broadening the scope of products and services that platforms can offer. It explicitly states that “digital assets” include crypto assets, stablecoins, and tokenized securities, relaxing asset inclusion requirements—for example, removing the 12-month track record requirement for professional investors (PI) holding crypto assets—and allowing licensed stablecoin issuers to directly offer stablecoins to retail investors.

The circular also proposes amendments to licensing conditions, enabling VATPs to participate in the distribution of digital asset-related investment products and tokenized securities, and provide custody services for digital assets not yet traded on the platform, provided they meet relevant technical, security, monitoring, and AML requirements. The focus is on “product diversification”; the issuance of crypto assets (including stablecoins) to professional investors without the 12-month history requirement is permitted, and stablecoins issued by licensed stablecoin issuers can be sold to retail investors. Moreover, the platform can distribute tokenized securities and digital asset-related investment products in compliance with current regulations, and custody unlisted digital assets through related entities.

3. Why Issue Circulars: Strategic Continuity and Market Response

3.1 Strategic Continuity — The ASPIRe Roadmap

The release of these two circulars is not an isolated policy move but a concrete implementation of the Hong Kong SFC’s “ASPIRe” roadmap announced on February 19, 2025. The roadmap is structured around five pillars: Access, Safeguards, Products, Infrastructure, and Relationships, outlining Hong Kong’s long-term regulatory direction for the crypto asset market.

Specifically, the “Shared Liquidity Circular” mainly addresses the “Access” pillar in the ASPIRe roadmap—aiming to strengthen Hong Kong’s connection with overseas liquidity, enhance market efficiency, and provide Hong Kong investors with deeper and broader global liquidity. The “Expansion of Products and Services Circular” responds to the “Products” pillar, designed to meet the diverse needs of different investor categories while balancing risk control and investor protection.

During a fintech forum, the SFC’s Chief Executive Officer, Julia Leung, pointed out that Hong Kong is evolving from a closed ecosystem centered on investor protection and licensed crypto platforms into a crucial stage of “connecting local markets with global liquidity.” This arrangement allows licensed platforms to share order books with related overseas platforms, enabling local investors to access global liquidity and attracting this liquidity to Hong Kong’s virtual asset market.

[ASPIRe Roadmap Diagram (Source: Hong Kong SFC)]

3.2 Responding to Market Liquidity Challenges

Another reason for issuing the circulars is to address the liquidity dilemmas in Hong Kong’s crypto markets.

According to Fu Rao, Executive Director of the Hong Kong New Economy Research Institute, the local crypto market has long faced two intractable issues: first, weak trading activity and thin order books on local platforms, where many tokens have visible prices but little matching; second, frequent price discrepancies and slippage between Hong Kong and overseas large platforms for the same assets. These problems affect user experience and undermine Hong Kong’s credibility as a pricing hub. The shared liquidity mechanism in the circulars is a systemic response—by selectively “bringing in” overseas compliant liquidity, using regulatory frameworks rather than relying solely on spontaneous market behavior, to address liquidity shortages and price gaps. For Hong Kong, price discovery is no longer confined to small local pools but is connected to global mainstream liquidity pools under a regulated framework, which is expected to narrow spreads and bring trading levels closer to global standards.

On a deeper level, the release of these two circulars signifies a shift in Hong Kong’s crypto asset regulation from “gatekeeping” to “empowering”: new rules no longer merely impose restrictions but actively pave the way for institutional participation in compliant crypto activities; they aim not only to contain risks but also to facilitate innovation by integrating gray areas into the regulatory framework. According to Fu Rao, Hong Kong’s regulation has never been simply about permissiveness but about conditional opening under controllable risks. The design of the shared order book mechanism clearly establishes red lines: cooperation only with licensed institutions, data sharing within a regulated framework, and asset settlement based on the core “Delivery versus Payment” (DvP) principle… This locks in the legal, technical, and counterparty risks that cross-border cooperation may bring into a verifiable and accountable regulatory closed loop.

4. Impact on Hong Kong’s Crypto Market

4.1 Rebuilding Trust in the Digital Asset Hub

From a regulatory perspective, the release of the circulars reflects Hong Kong’s core principle of “same business, same risk, same rules.” Dr. Yip Chi-wai, Executive Director of the SFC’s Intermediaries Division, emphasized that the new roadmap adheres to the core principles of investor protection, sustainable liquidity, and flexible regulation, precisely responding to the challenges of the emerging crypto asset market.

It is noteworthy that, beyond promoting market development, the SFC also emphasizes stringent risk controls in the circulars. The shared liquidity mechanism requires overseas related platforms to have established regulatory frameworks aligned with FATF recommendations and IOSCO crypto asset policy suggestions, and to be under ongoing supervision by local regulators. In settlement mechanisms, measures such as full pre-funding, DVP, and intraday settlement are mandated. For investor protection, requirements include establishing customer compensation reserve funds and insurance arrangements.

Meanwhile, the SFC continues to strengthen AML regulation. An important circular issued on November 17, 2025, urges licensed firms and crypto trading platforms to remain vigilant against suspicious fund transfers indicative of layered transactions, to prevent money laundering. It also coordinates with police to establish a “24/7 stoppage” mechanism, enhancing the detection and prevention capabilities for virtual asset crimes.

4.2 Shaping Opportunities and Challenges in Investment Landscape

For platforms and practitioners, the primary benefit of the circulars is a significant expansion of business opportunities. The product expansion circular enables platforms to quickly list new tokens and stablecoins, distribute tokenized securities and digital asset products, and develop custody services. The shared liquidity circular helps improve trading depth and efficiency, enhancing user experience.

An unavoidable challenge is the increased compliance cost. Participating in shared liquidity requires establishing complex cross-border settlement systems, unified market monitoring plans, reserve fund mechanisms, and more. This raises higher demands on platforms’ technical capabilities, financial strength, and compliance standards.

From an industry ecosystem perspective, the Hong Kong crypto industry in 2025 shows a clear trend toward integration. Traditional financial institutions are actively embracing crypto activities, with over 40 brokerages, 35 fund companies, and 10 major banks involved in crypto asset services. The culture of crypto-native, internet finance, and traditional finance are tearing and merging, shaping Hong Kong’s unique crypto ecosystem.

5. Summary and Outlook

The issuance of the circulars marks a new phase in Hong Kong’s crypto asset regulation. It is not only a systemic response to local liquidity issues but also a strategic move for Hong Kong to secure a regulatory high ground in the global digital asset landscape.

On one hand, the SFC and HKMA are promoting deep integration of traditional finance and blockchain technology. The HKMA’s “Financial Technology 2030” vision will facilitate financial tokenization and serve as a demonstration for asset tokenization. The e-HKD pilot program continues, focusing on tokenized asset settlement, programmable payments, and offline payments. On the other hand, from a global perspective, regulatory frameworks in Hong Kong, Singapore, and the UAE are increasingly aligned. The EU’s MiCA regulation, Dubai’s VARA system, and Hong Kong’s VASP licensing regime are converging on core principles—emphasizing investor protection, AML compliance, and market integrity. Through aligning with international standards, Hong Kong is poised to play an important bridging role in global digital asset regulation coordination.

Looking ahead, with continuous expansion of product offerings, accelerated development of stablecoin ecosystems, and deep integration of traditional finance with Web3, Hong Kong is expected to become a truly global digital asset hub connecting East and West. As Dr. Yip Chi-wai said: “Hong Kong, which grew from a small fishing village into a leading financial center today, has the capacity to achieve similar success in the virtual asset market.”