Hong Kong to allow crypto exchanges to tap global capital pools

The former British colony’s three-year push to become a regional leader in digital assets has so far delivered mixed results

[HONG KONG] Hong Kong plans to ease rules to encourage crypto trading activity in the city, its top market regulator said.

Crypto trading platforms licensed by the Hong Kong Securities and Futures Commission (SFC) will be allowed to connect local entities with their global order books, chief executive officer Julia Leung said at the city’s flagship Fintech Week on Monday (Nov 3). A regulatory circular will come later today, she said.

The change moves from the current ringfenced model that only matches orders within Hong Kong, and will bring crypto trading in line with local rules that apply to traditional assets.

Hong Kong’s three-year push to become a regional leader in digital assets has so far delivered mixed results. The former British colony has established a licensing regime for crypto platforms, listed exchange-traded products that track Bitcoin and Ether, and oversees digital-asset funds. But crypto activity remains relatively muted compared with hubs such as the US, whose President Donald Trump has embraced the industry.

“You can say we are on the tougher side,” said Leung. “Once we are sure that we are able to protect the investors, we do relax, as we did with the global liquidity.”

The securities regulator is finalising rules for licensing crypto dealers and custodians, and the de facto central bank will hand out the first licenses for stablecoin issuers next year.

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In the next phase, the regulator is also considering allowing locally-licensed crypto brokers, as distinct from exchanges, to tap into global liquidity pools, Leung said. “That’s for another day,” she added, without specifying a time frame.

If enacted, that could entice crypto trading giants such as Binance Holdings and Coinbase Global, which would be able to set up shop in the city with a broker license rather than a full crypto exchange license, which can take years to obtain.

There are currently 11 crypto exchanges that are fully-licensed with the SFC, while a total of 49 brokers are allowed to provide virtual asset dealing services under an omnibus account arrangement, the regulator’s register shows.