Fruitful Aspirations: Expansion of permitted virtual asset trading activities
The Securities and Futures Commission (SFC) published its regulatory roadmap for virtual assets (VA) on 19 February 2025, named the ASPIRe framework. We reported on the foundational principles of the framework and developments in the first year in our recent article. Earlier this week at Consensus Hong Kong 2026, the SFC has taken further meaningful steps in implementing that framework. In this article, Pádraig Walsh from our Fintech practice group looks at the SFC announcements on 11 February 2026 of trading‑related measures to enhance liquidity and broaden scope of existing regulated VA activities in Hong Kong.
Expanding Product Offerings
In the ASPIRe framework, the SFC acknowledged that limited product range and liquidity pools were challenges under Hong Kong regulation and the range of VA products and services needed to be expanded.
VA Margin Financing
Previously, SFC‑licensed VA brokers were prohibited from providing financing to clients to acquire VAs. This position has now changed. Under an SFC Circular issued on 11 February 2026, VA brokers can extend margin financing to their securities margin clients, subject to sufficient collateral sufficiency and investor risk safeguards. This measure, aligned with Pillar P of ASPIRe, enables margin clients with strong credit profiles and adequate collateral to participate in the VA market. The intention is this should support deeper liquidity and foster development of VA financing in a controlled and risk‑managed manner.
VA Perpetual Contracts (Perps)
In a significant shift, the SFC has also permitted SFC‑licensed virtual asset trading platform operators (VATPs) to introduce Perps. This is a key product in global crypto markets. Perps are, in a nutshell, leveraged instruments with no expiry date that track the price of an underlying asset or index. They involve leverage and margining, and are high risk derivative products. Strong governance and transparent processes around pricing, liquidation and trading are essential.
The SFC has published a high-level framework on 11 February 2026 outlining the core safeguards it expects. Interested VATPs can now submit their proposed structures for discussion with the SFC. Key expectations evolve around product design, trading transparency, valuation, margin and liquidation arrangements, market surveillance systems and the disclosures needed to help investors make informed decisions.
Enhancing Accessibility
The ASPIRe framework acknowledged that there was a need for enhanced liquidity provision to lower transaction costs, narrow bid-ask spreads, and stimulate product innovation in the Hong Kong VA market. The SFC committed to clarify its regulatory and financial rules expectations to facilitate the onboarding process for institutional-grade liquidity providers, market makers and proprietary trading firms. The goal was to provide regulatory clarity to reduce barriers for liquidity providers to connect with Hong Kong VATPs.
As a first step, on 3 November 2025, the SFC published a Circular permitting SFC-licensed VATPs to integrate their orderbooks with qualified overseas VATPs to form a Shared Order Book. This would connect Hong Kong VATPs to the deeper global liquidity, while maintaining market integrity.
Affiliated Market Makers (AFMM)
Now, the SFC has also introduced a change aimed at improving market depth and stability by broadening access through Pillar A of the ASPIRe framework. In the past, companies affiliated with a VATP were generally not allowed to conduct proprietary trading on that platform due to potential conflicts of interest. The SFC confirmed in a Circular published on 11 February 2026 that affiliates of VATPs can now act as market makers, provided there are effective conflict‑management controls in place and client interests remain prioritised.
Conclusion
These recent announcements continue the pragmatic development of the regulated VA market in Hong Kong. As regulatory and market experience grows, there is more space to operate within the regulated sector. This is a combination of new licences and now, increasing products, liquidity and scope of operation upon being licensed. The SFC’s intention is to build market depth. These three initiatives collectively signal a more mature future for Hong Kong’s VA ecosystem. We can look forward to more developments as the ASPIRe framework continues to bear fruit.
Padraig Walsh
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Pádraig Walsh
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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.