SFC (Securities and Futures Commission — Hong Kong)

The Securities and Futures Commission (SFC) is Hong Kong’s independent statutory regulator responsible for regulating securities and futures markets and protecting investors. Established by the Securities and Futures Commission Ordinance, the SFC has developed into one of Asia’s most rigorous financial regulators and has built a comprehensive licensing framework for virtual asset trading platforms (VATPs) that became mandatory in June 2023.

Institutional Structure and Leadership

The SFC was established in 1989, taking over the regulatory functions previously performed by the Commissioner for Securities and the Commissioner for Commodity Trading. The SFC operates under the Securities and Futures Ordinance (SFO) and a suite of subsidiary legislation, with jurisdiction over securities, futures contracts, leveraged forex trading, and related fund management activities. Julia Leung has served as CEO since late 2022, guiding the SFC through the complex transition from an opt-in to a mandatory VATP licensing regime and through the turbulence of the JPEX fraud case.

The VATP Mandatory Licensing Regime

The SFC operated a voluntary opt-in licensing regime for virtual asset trading platforms from November 2019. Under this regime, VATPs that chose to offer security tokens to professional investors could apply for a licence under the SFO, but platforms dealing only in non-security virtual assets were not required to seek SFC authorization.

The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022, which came into effect June 1, 2023, fundamentally changed this structure by making VATP licensing mandatory. Under the revised framework, any person operating a virtual asset trading platform in Hong Kong or actively marketing to Hong Kong investors must hold an SFC VATP licence regardless of whether the tokens traded are classified as securities. This comprehensive approach gives the SFC jurisdiction over all centralized crypto exchange activities in Hong Kong.

The SFC’s VATP licensing standards are demanding by international comparison. Key requirements include: operating standards for system resilience and cybersecurity; custody standards requiring that at least 98% of client virtual assets be held in cold storage; financial resources requirements; governance and management competency requirements; market integrity controls including trade surveillance; and AML/CFT programs meeting or exceeding FATF standards. Retail access is permitted for VATP-listed tokens that pass a rigorous token admission framework developed by the SFC.

As of early 2026, seven VATP licences had been granted, with a pipeline of applications under review. The relatively small number of licences reflects the SFC’s deliberate pace and the demanding standards of the regime.

The JPEX Incident and Its Impact

The JPEX case was one of the most significant crypto fraud incidents in Hong Kong’s history and had a direct impact on the SFC’s regulatory posture. In September 2023, Hong Kong police arrested multiple individuals connected to JPEX, a cryptocurrency exchange that had aggressively marketed to retail investors in Hong Kong through celebrity endorsements and influencer promotions despite never having obtained an SFC licence. Approximately HKD 1.5 billion (around USD 190 million) in investor losses were reported.

The SFC had issued a warning about JPEX in July 2023, noting its unlicensed status, but the warning came after a large volume of marketing had already occurred. The incident reinforced the SFC’s decision to proceed with a stringent mandatory licensing regime and accelerated the agency’s development of guidance on what constitutes “actively marketing” to Hong Kong investors — the trigger for licensing obligations even for offshore-based platforms.

Post-JPEX, the SFC enhanced its public register of licensed and suspicious VATPs, issued more proactive investor warnings, and worked with Hong Kong’s Communications Office to restrict unlicensed platforms’ online advertising. The incident also informed the SFC’s retail token admission framework, which explicitly requires due diligence on token projects’ governance, liquidity, and disclosure standards before SFC-licensed platforms may offer them to retail investors.

The ASPIRe Roadmap

In early 2025, the SFC published the ASPIRe Roadmap, a comprehensive five-pillar framework articulating the SFC’s strategic vision for developing Hong Kong into a leading regulated virtual asset hub. The five pillars of ASPIRe cover: Access (facilitating legitimate market access for a broader range of participants), Safeguards (maintaining robust investor protection and market integrity), Products (expanding the range of regulated virtual asset products available in Hong Kong), Infrastructure (developing the regulated market infrastructure for tokenized assets and digital settlement), and Relationships (international regulatory cooperation and mutual recognition arrangements).

The ASPIRe Roadmap built on Hong Kong’s earlier policy statement on virtual assets issued in October 2022 and provided a more detailed operational roadmap. Key initiatives under ASPIRe include expansion of the VATP regime to cover over-the-counter derivatives on virtual assets, development of a regulatory framework for virtual asset custodians separate from the VATP framework, and cooperation with HKEX on tokenized securities listing standards.

Coordination with HKMA and HKEX

The SFC’s VATP jurisdiction sits alongside complementary regulatory frameworks administered by the Hong Kong Monetary Authority (HKMA) and Hong Kong Exchanges and Clearing Limited (HKEX). HKMA leads the stablecoin licensing regime, published in final consultation form in 2024, which governs issuers of fiat-referenced stablecoins in Hong Kong. HKEX is developing tokenized securities listing standards that will integrate with the SFC’s regulatory framework for security tokens under the SFO. This tripartite coordination ensures comprehensive coverage of the virtual asset ecosystem while preserving each regulator’s specialized expertise within its domain.