The Hong Kong Securities and Futures Commission (SFC) has issued a notice allowing virtual asset pledge services as scheduled, in accordance with the virtual asset roadmap.

On September 30th, the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) jointly issued a new notice updating the licensing or registration requirements for intermediaries (i.e., securities firms licensed by the SFC) engaging in virtual asset-related activities. This notice relaxes some regulations based on market developments and industry feedback, and guidance will be issued in the future regarding activities involving stablecoins.

The key updates are as follows:

1. Pledge Services Allowed: Intermediaries can now provide virtual asset pledge services to clients, but they must operate through separate accounts, such as licensed platforms, and clearly explain the associated risks to clients.

2. Off-Platform Trading Allowed: Licensed companies and registered institutions may conduct virtual asset trading services off-platform through licensed platforms.

3. Clarification on Customers Using Virtual Assets to Subscribe for and Redeem Products: Customers using virtual assets to subscribe for or redeem investment products (such as virtual asset funds) will not be considered to be providing virtual asset trading services. Intermediaries must notify relevant authorities in advance, maintain legally binding virtual asset holdings, and adhere to anti-money laundering regulations.

4. Exceptions to Net Asset Requirements and Risk Disclosures: For institutional professional investors and qualified corporate professional investors, intermediaries are not required to ensure that they have sufficient net assets, nor are they required to make special risk disclosure statements for virtual asset futures contracts.

Original text:

Supplementary Joint Circular on Virtual Asset-Related Activities of Intermediaries.

September 30, 2025.

1. This Circular 1 supplements the "Joint Circular on Virtual Asset-Related Activities of Intermediaries" issued by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) on December 22, 2023 (the Joint Circular) to update the relevant licensing or registration terms and conditions applicable to intermediaries.

Background

2. The Joint Circular sets out the requirements applicable to intermediaries2 that intend to or currently engage in certain virtual asset trading services, advisory services, asset management services, and/or the distribution of investment products involving virtual assets (virtual asset-related activities). The SFC and the HKMA have reviewed the Joint Circular in light of recent market developments and industry feedback. Based on the findings of this review, the SFC and the HKMA have jointly introduced certain optimization and relaxation measures to the relevant requirements to facilitate market development while maintaining investor protection. The SFC and the HKMA will issue further guidance summaries in the near future regarding activities involving specified stablecoins issued by issuers licensed by the HKMA under the Stablecoins Ordinance (Cap. 656).

3. This circular sets out the relevant amendments to the joint circular. The "Licensing or Registration Terms and Conditions Applicable to Licensed Corporations or Registered Institutions Providing Virtual Asset Trading Services and Advising on Virtual Assets" (Appendix 6 to the joint circular) (the "Terms and Conditions") have also been updated accordingly and are set out in Appendix A. A marked-up version of the "Terms and Conditions" is set out in Appendix B.

4. Given that the SFC has issued pledge requirements applicable to SFC-licensed platforms4 and SFC-authorized virtual asset funds5, and the HKMA has issued similar guidance to authorized financial institutions and subsidiaries of locally incorporated authorized financial institutions6, both regulators are now prepared to allow intermediaries to provide pledge services to their clients. The Terms and Conditions have been amended accordingly7. "Pledge activity" means any activity conducted by a licensed corporation or registered institution on behalf of its clients that involves pledging or locking up the client's virtual assets in order to participate in the blockchain protocol's validation process under a proof-of-stake consensus mechanism and to enjoy the rewards generated and distributed as a result of participating in that process.

5. Intermediaries that conduct virtual asset trading for clients may provide pledge services to such clients, but only through segregated accounts maintained on an SFC-licensed platform or an authorized financial institution (or a subsidiary of a locally registered authorized financial institution) and subject to, among other requirements, disclosure and risk management requirements.

Use of Off-Platform Services Provided by SFC-licensed Platforms

6. With respect to providing virtual asset trading services to clients, licensed corporations and registered institutions may now execute transactions through off-platform virtual asset trading services provided by SFC-licensed platforms. Consequently, Clause 4.2 of these Terms and Conditions has been deleted.

Using Virtual Assets to Subscribe for or Redeem Investment Products

7. The SFC and the HKMA wish to clarify that clients using virtual assets to subscribe for and redeem investment products, or subscribing for or redeeming virtual asset funds in kind, will not be considered as providing virtual asset trading services. Relevant intermediaries (including portfolio managers and discretionary account managers) should:

(a) notify the SFC and (where applicable) the HKMA of such activities in advance;

(b) hold virtual assets in accounts opened and maintained with an SFC-licensed platform or an authorized financial institution (or a subsidiary of a locally registered authorized financial institution) where the license or registration is subject to Type 9 regulated (c) ensuring that, when handling deposits and withdrawals of such virtual assets for clients, they comply with the applicable requirements of Chapter 12 of the "Guidelines on Combating Money Laundering and Counter-Terrorist Financing (Applicable to Licensed Corporations and Virtual Asset Service Providers Licensed by the SFC)".

Distributing Investment Products Involving Virtual Assets

8. Paragraph 6.2 of the Joint Circular provides that intermediaries should ensure that clients have sufficient net assets to bear the risks and possible losses of trading in virtual asset-related products. The SFC and the HKMA wish to clarify that this requirement does not apply to clients of institutional professional investors and qualified corporate professional investors.

9. With regard to paragraph 13 of the Joint Circular, the SFC and the HKMA wish to clarify that the requirement for intermediaries to provide risk disclosure statements to clients, specifically in relation to virtual asset futures contracts, does not apply to clients of institutional professional investors and qualified corporate professional investors.

Implementation

10. Intermediaries must notify the SFC and, where applicable, the HKMA before making any changes to their virtual asset-related activities, including any of the following:

(a) the types of clients served;

(b) allowing clients to deposit virtual assets into or withdraw virtual assets from the intermediary's accounts for the first time;

(d) allowing clients to use virtual assets to subscribe for or redeem products for the first time;

(e) any other significant changes to the relevant activity arrangements first communicated in the prior notification.

For enquiries, please contact the relevant case officer of the SFC or the Banking Conduct Department of the HKMA (as the case may be).

Securities and Futures Authority, Hong Kong Monetary Authority.

Intermediaries Department, Banking Conduct Department.

Attached Annex.

End.

1. Unless otherwise specified, capitalized terms in this circular shall have the same meanings as those defined in the Joint Circular. This circular should be read in conjunction with the Joint Circular.

2. SFC-licensed virtual asset trading platforms should also refer to the SFC's "Circular on SFC-authorized Funds Investing in Virtual Assets" dated April 7, 2025, regarding the distribution of investment products involving virtual assets. The SFC and the HKMA also wish to clarify that, unless otherwise specified, registered institutions should comply with the expected standards of conduct and guidance on tokenized products issued from time to time by the HKMA (for example, the HKMA's Notice on the Sale and Distribution of Tokenized Products dated February 20, 2024).

3. Please refer to section 4 of the Stable Currencies Ordinance (Cap. 656).

4. See the SFC's Circular on Pledge Services Provided by Virtual Asset Trading Platforms dated April 7, 2025.

5. See the SFC's revised Circular on Investment in Virtual Assets by SFC-Authorized Funds dated April 7, 2025.

6. See the HKMA's Notice on "Providing Pledge Services to Clients in Relation to Virtual Assets Held for Clients" dated April 7, 2025.

7. Please refer to Section VIII of these updated Terms and Conditions.