Review of the Development of the Virtual Asset Market in Hong Kong in 2024

In 2024, the Hong Kong virtual asset market has welcomed several significant advancements, from the improvement of regulatory frameworks to the launch of innovative products, with Hong Kong gradually establishing its position as a leading digital asset hub in Asia.

Spot Cryptocurrency ETF Approved

In April, the Hong Kong Securities and Futures Commission officially approved the first batch of virtual asset spot ETFs. This marks the first launch of such products in the Asian market, with the Ether spot ETF being a global first. This initiative not only enriches investors' choices but also highlights Hong Kong's innovative spirit in the field of digital assets.

License Application Process

In June, the transitional period for the VATP license of the Hong Kong Securities and Futures Commission is about to end, and several platforms are actively submitting applications. Although some exchanges have chosen to withdraw their applications, this process still reflects the strict control and regulatory requirements of Hong Kong regulators over the virtual asset market.

The Development of the Stablecoin Ecosystem

In July, the Hong Kong Monetary Authority announced the first batch of participating companies in the stablecoin regulatory sandbox. A large technology company announced plans to issue a stablecoin pegged 1:1 to the Hong Kong dollar, which will be the company's first cryptocurrency stablecoin product issued in Hong Kong.

Ensemble Project Sandbox Launch

In August, the Hong Kong Monetary Authority launched the Ensemble project sandbox, aimed at promoting the application of tokenization technology in the financial sector. The project covers multiple areas including fixed income, investment funds, liquidity management, green finance, and trade supply chain financing, showcasing Hong Kong's foresight in financial innovation.

Personnel Changes in Regulatory Agencies

In October, the Hong Kong Securities and Futures Commission welcomed a new chairman for a three-year term. The new chairman emphasized the importance of fostering a sustainable and vibrant capital market, protecting investor interests, promoting economic growth, and stimulating innovation.

In the same month, the third virtual asset exchange obtained a license from the Hong Kong Securities and Futures Commission, marking a further improvement in Hong Kong's virtual asset trading ecosystem.

Launch of Virtual Asset Index Series

In November, Hong Kong launched a virtual asset index series, providing transparent and reliable benchmark prices for Bitcoin and Ethereum in the Asian time zone. This initiative not only addresses the issue of price discrepancies for virtual assets across global exchanges but also offers investors a unified reference standard.

In the same month, a Hong Kong digital bank became the first bank in Asia to offer cryptocurrency trading services to retail users, supporting Bitcoin and Ethereum transactions.

Stablecoin Regulatory Framework

In December, the Hong Kong Legislative Council held the first reading of the "Stablecoin Bill", which stipulates that the issuance of fiat stablecoins, Hong Kong dollar stablecoins, or activities promoting stablecoins to the public must obtain a license. This bill aims to regulate the stablecoin market and protect the rights of investors.

The number of licensed exchanges is increasing

In December, the Hong Kong Securities and Futures Commission issued licenses to four virtual asset trading platforms, increasing the total number of licensed platforms to seven. The Commission also plans to establish an advisory group in early 2025 to further strengthen the regulation of virtual asset platforms.

Cross-Border Digital Asset Trading Proposal

At the end of the year, a legislative council member proposed the idea of launching "Digital Tong", allowing mainland investors to buy and sell digital assets recognized by Hong Kong through a special channel. This proposal aims to promote financial connectivity between the mainland and Hong Kong, and to drive financial innovation and the development of new productive forces.

Overall, in 2024, Hong Kong has made significant progress in the field of virtual assets, from the improvement of the regulatory framework to the launch of innovative products, Hong Kong is gradually consolidating its position as Asia's leading digital asset center. In the future, Hong Kong is expected to play a more important role in the global digital finance sector.