Joint Circular from the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority: Intermediaries are allowed to provide virtual asset pledge services

On September 30, the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) jointly issued a "Supplementary Joint Circular Regarding Virtual Asset-Related Activities of Intermediaries," updating the licensing or registration requirements for intermediaries. Based on market developments and industry feedback, the two authorities have optimized and relaxed some regulations and will subsequently issue guidance regarding designated stablecoin activities. First, intermediaries are permitted to provide staking services to their clients, but must operate through separate accounts such as licensed platforms and disclose risks. Second, licensed corporations and registered institutions may provide off-platform trading services through licensed platforms. Third, it is clarified that clients subscribing to and redeeming investment products using virtual assets, or subscribing to or redeeming virtual asset funds in kind, will not be considered providing virtual asset trading services. Intermediaries are required to provide advance notice, maintain legally compliant holdings of virtual assets, and comply with anti-money laundering regulations. Fourth, the requirements for intermediaries to ensure clients have sufficient net worth and the requirement for intermediaries to provide risk disclosure statements to clients specifically for virtual asset futures contracts are clarified. These do not apply to clients who are institutional professional investors or qualified corporate professional investors.