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Hong Kong's SFC recently introduced two major regulatory updates for virtual asset trading platforms (VATPs). There are (1) a Circular on Shared Liquidity by Virtual Asset Trading Platforms, and (2) a Circular on Expansion of Products and Services of Virtual Asset Trading Platforms, both published on 3 November 2025 (the "Circulars"). These new rules could revolutionize how VATPs operate and interact with global markets but also set a higher bar for compliance, risk management, and investor protection.
Start With Your Partners and Platform Structure
If your platform is considering integrating its order book with overseas affiliates (OVATPs) and tap into global liquidity, it will be important to confirm that your partners are properly regulated. The SFC only allows pooling with OVATPs from jurisdictions that:
- Are members of the Financial Action Task Force (FATF) or equivalent regional bodies.
- Have effective regulations aligned with FATF and International Organization of Securities Commissions (IOSCO) standards on anti-money laundering, client asset protection, and market abuse.
Under the SFC Circulars, a shared order book is expected to be operated according to a comprehensive set of rules (Shared Order Book Rules), including, among others, that any trading system is expected to accept only fully pre-funded orders, and the operators are expected to implement automated verifications, to help ensure every order is backed by real assets no matter where the client is located.
Settlement and Client Safeguards
As market surveillance becomes more complex with overseas liquidity, joint monitoring system with affiliates may be beneficial. A Responsible Officer or Manager-in-Charge may need to take on the job of detecting, investigating, and managing suspicious activities across partner platforms. It may also be helpful to maintain robust records, and to have the ability to provide full order and trade data to the SFC, as well as keep clear, up-to-date disclosures for your clients.
It is also worth noting that the SFC's written approval is required before launching a shared order book or making changes to your business model in line with the new regime.
Expanding Your Service and Product Offering
Under the new rules, VATPs have more flexibility to list and distribute all virtual assets (including stablecoins). The old 12‑month trading track record rule is no longer applicable for professional investors. However, for retail investors, access may be limited to licensed stablecoins without such a track record — and for other tokens, the previous approach may still be relevant.
An application to the SFC will be required if you plan to distribute virtual asset investment products or offer custody for non‑platform assets. For every new token or stablecoin, the expected practice remains to conduct thorough due diligence, document findings clearly, and provide upfront disclosure of all risks to clients, among others – especially if the asset is less than 12 months old.
If you are considering expanding into custody, the SFC might expect strong anti‑money laundering systems, robust technology controls, and clear segregation of client assets before granting approval.
Continuous Monitoring and Good Recordkeeping
Ongoing compliance typically involves more than one-time checks. It is advisable to regularly review both your internal controls and every token or product you list on your platform. It may also be helpful to monitor regulatory developments, update your policies as needed, and be prepared to demonstrate your procedures and audit logs to the SFC when needed. As indicated in the Circulars, client protection should remain at the core of any operating model – from choice of partners to client documentation to daily operations.
The new SFC rules are considered a bold move to connect Hong Kong with global virtual asset flows and investment opportunities, but they demand much more from platforms in terms of compliance effort and discipline. Starting to plan and build these processes early may help support a smoother transition to shared liquidity and product expansion.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
