Major Events in the Development of Virtual Assets in Hong Kong in 2024

April: Spot Bitcoin and Ethereum ETFs Approved

The Hong Kong Securities and Futures Commission's official website has announced the approved list of virtual asset spot ETFs, which includes related products from Huaxia (Hong Kong), Harvest International, and Bosera International. This marks the first launch of such products in the Asian market, particularly the Ether spot ETF products, which are among the first in the world.

June: License Application Turmoil

On May 31, 2023, the China Securities Regulatory Commission (CSRC) issued a circular regarding the VATP license manual and the transitional arrangements for the licensing system. This circular requires virtual asset exchanges operating in Hong Kong at that time to obtain a license issued by the regulatory authority before the end of a one-year transition period.

By the end of May 2024, many platforms actively submitted license applications. However, some mainstream trading platforms withdrew their applications for compliance licensing in Hong Kong, which raised concerns in the market about the prospects of the Hong Kong virtual asset market.

July: JD Enters the Hong Kong Stablecoin Market

On July 18, 2024, the Hong Kong Monetary Authority (HKMA) announced the list of participants in the stablecoin regulatory sandbox, with JD.com, Circle, and Standard Chartered being the first companies to participate.

Subsequently, JD Coin Chain Technology (Hong Kong) announced that it will issue a cryptocurrency stablecoin pegged to the Hong Kong dollar at a 1:1 ratio. As a subsidiary of JD Technology Group, JD Coin Chain becomes the only potential stablecoin issuer under JD. The stablecoin will be issued based on a public chain, with reserves consisting of highly liquid and credible assets, and stored in independent accounts at licensed financial institutions. JD stated it will verify the integrity of reserves through regular disclosures and audit reports, and cooperate with global regulatory agencies to ensure compliance with relevant laws and regulatory standards.

August: Hong Kong Monetary Authority Launches the Ensemble Project Sandbox

On August 28, 2024, the Hong Kong Monetary Authority launched the Ensemble Project Sandbox, aimed at promoting the application of tokenization technology in the financial sector. The first phase of the project covers four main themes: fixed income and investment funds, liquidity management, green finance, and trade supply chain financing.

The Monetary Authority has completed the sandbox setup and is cooperating with banks to prepare for cross-bank payment and currency settlement experiments. The Securities and Futures Commission will work with the Monetary Authority to promote the development of the tokenized asset market, enhance Hong Kong's innovative status in the global financial market, and plans to collaborate with international organizations to promote the development of global tokenization technology.

October: New Chairman of the Hong Kong Securities and Futures Commission Takes Office and Third Virtual Asset Exchange Approved

The Chief Executive of the Hong Kong Special Administrative Region has appointed Dr. Huang Tianyou as the Chairman of the Hong Kong Securities and Futures Commission in accordance with the Securities and Futures Ordinance, for a term of three years, from October 20, 2024, to October 19, 2027. Dr. Huang stated that he will be committed to fostering a sustainable and vibrant capital market, protecting investor interests while promoting economic growth, enhancing corporate governance, and stimulating innovation.

On October 4, 2024, the Hong Kong Securities and Futures Commission updated the list of Virtual Asset Trading Platforms (VATP), granting the Hong Kong Virtual Asset Exchange (HKVAX) a Type 1 (Securities Trading) and Type 7 (Automated Trading) license. HKVAX offers over-the-counter trading, trading platform, and custody services, focusing on Security Token Offerings (STO) and Real-World Asset Tokenization (RWA), aiming to promote the development of Hong Kong's fintech ecosystem.

November: Hong Kong Stock Exchange Launches Virtual Asset Index Series and ZhongAn Bank Goes Live with Cryptocurrency Trading Services

On November 15, 2024, the Hong Kong Stock Exchange officially launched a virtual asset index series, providing transparent and reliable benchmark prices for Bitcoin and Ether in the Asian time zone. The index series aims to address price discrepancies of virtual assets across global exchanges, offering investors a unified reference price.

On November 25, Hong Kong digital bank ZA Bank announced that it has become the first bank in Asia to offer cryptocurrency trading services for retail users. The service supports Bitcoin and Ethereum trading, and users can trade in Hong Kong dollars and US dollars through the ZA Bank App, with a minimum transaction amount of 70 USD or 600 HKD.

December: Release of the "Stablecoin Regulation Draft" and Addition of Four Licensed Exchanges

On December 18, the "Stablecoin Regulation Draft" was submitted to the Legislative Council for its first reading. The draft stipulates that activities involving the issuance of fiat stablecoins, Hong Kong dollar stablecoins, or the promotion of stablecoins to the public require a license. The regulatory focus includes robust management of reserve assets, protection of redemption rights for token holders, and requirements for combating money laundering.

On the same day, the Hong Kong Securities and Futures Commission announced the issuance of licenses to four virtual asset trading platforms, increasing the number of licensed virtual asset trading platforms in Hong Kong to seven. These four platforms include Cloud Account Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group, and Thousand Whales Technology. The Commission stated that it is accelerating the approval process for virtual asset platforms and plans to establish a consultative group in early 2025 to strengthen the regulation of virtual asset platforms.

On December 31, Hong Kong Legislative Council member Wu Jietzhuang proposed the introduction of "Digital Connect", allowing mainland investors to trade Hong Kong-recognized digital assets through a special channel, in order to promote financial connectivity between the mainland and Hong Kong, and to drive financial innovation and the development of new productive forces.