Ye Zhiheng: SFC's three major clusters for the next 12 months, tokenization product framework is a global first

Speaker: Yip Chi-heng, Executive Director of the Intermediary Institutions Division at the Hong Kong Securities and Futures Commission

Source: 2026 Hong Kong Web3 Carnival

Compiled by: Wu Says Blockchain

TL;DR:

● Regulatory progress and achievements: Hong Kong’s digital asset regulatory framework has been listed as “one of the highest levels” in the peer review by the Financial Stability Board. Over the past year, it has delivered 6 milestones, including consultations on virtual asset collateral and custody systems.

● Core of the SPAR plan: Emphasizing “focus” and “ambition.” Beyond publishing policy announcements, it expands Hong Kong’s digital influence at both local and international levels through real execution.

● Three major clusters for the next 12 months: 1) Regulatory rollout (legislation for virtual asset management and advisory systems); 2) Product innovation (establishing a framework for tokenized asset trading and regulating derivatives); 3) Interactive innovation (international regulatory cooperation and risk automation management).

● New tokenization initiatives: Soon, VATPs will be allowed to trade tokenized assets including price funds. This will establish the world’s first predictable, regulated trading framework of its kind.

● Regulatory philosophy: Uphold “haste makes waste is not the goal.” By building trust and balance between regulators and the market, we will promote the industry’s long-term development in a firm and pragmatic way.

Significant progress in the HKMA’s Fintech Roadmap over the past year

Ladies and gentlemen, friends, distinguished guests: we’re having many discussions, but don’t forget one thing—our forum today is actually called a grand event, so for us, this is also a moment to celebrate. What are we celebrating? We want to celebrate success. Now is the right time to celebrate.

Because the HKMA rolled out the “Fintech Roadmap” around February last year—more than a year ago. Here, we should celebrate the progress we’ve made. Since then, we have achieved a lot. I’m very happy to tell you that when I attended the Financial Stability Board forum in Basel last year, they mentioned that in peer review, Hong Kong has actually been ranked as “one of the highest levels”—in terms of the regulatory system, our digital asset regulatory regime has been fully refined.

This needs to thank many people: first, we should thank the government leadership for pushing this forward, and also thank the collective wisdom of all parties in the market, and of course, the exchange and communication with everyone here. Sorry that sometimes you have to go through the cumbersome procedures of the regulators, but I can assure you that sometimes this pain is mutual. We also have a saying: “No pain, no gain.” Last but not least, my teammates—including my colleagues from the SFC and the logical members. I assure you, especially Duncan—since you’re sitting here now, your workload this year is far heavier than last year.

SPAR plan: Focus, ambition, and international influence

Now, back to the celebration—this is also a good time to reflect and plan ahead. So my speech today is about SPAR in action, promoting Hong Kong’s digitization process. This is a journey. I’m sure many of you have seen these two messages, and I hope you can remember them today:

First, focus. We have achieved a lot, but at the same time, because there is too much work in front of us. Second, we can now be more ambitious. Since we’ve established our footing, we should expand our influence locally, and further expand our influence by getting exposure at the international level.

Almost every international regulatory meeting I attend, Hong Kong becomes a focus, because we have achieved a lot and have many ideas and implementations in our policy work. This is extremely, extremely important. We are a jurisdiction; we are a regulator. We implement policies rather than just talking about them—not only issuing announcements, but truly executing.

Six milestones achieved over the past year

We’ve taken a look back at the past year. It seems like a long time. We introduced the roadmap, and we have already achieved a lot of results.

The six milestones we went through were: two months after the roadmap was released, we allowed platforms to stake and authorized-fund staking—at the time, this was the first product of its kind. Two more months later, on June 28, with strong support from the government, together with the Financial Services and the Treasury Bureau, we launched a joint consultation on virtual asset trading and custody systems. The consultation was completed in the first half of last year—right around the eve of Christmas. Six months later, it received strong public support and many positive reviews, and we have continued to make progress.

In the fourth quarter of last year, we allowed more services and products to serve virtual asset platforms. At the same time, we put forward the concept of global liquidity integration in order to share order books. In the fourth quarter of last year, we rolled out an interesting initiative called “Crypto Tag,” using technology to strengthen Hong Kong’s defense for the digital asset market. This is actually reflected in Section 104 of the policy report: the SFC is using automated reporting systems to build a line of defense for the digital asset market in Hong Kong.

Two months ago (in February), at another international event, we allowed another set of interesting initiatives: providing a framework for perpetual contracts, and also allowing margin, financing, and so on. It also allowed platforms (now we have many platforms like this) to use their affiliated market makers to provide liquidity for Hong Kong investors.

In short, these are the achievements we have made—actually, in a single year, we have achieved many things. There’s a Chinese proverb: “Haste makes waste.” In Hong Kong, we never claim to be the fastest, nor do we claim to be the most adventurous government. But we remain steadfast—we’re advancing step by step, so sometimes our actions are faster, because our belief is firm, not because we are reckless. This is also the last milestone, which is still in progress.

We also announced an innovative plan aimed at strengthening communication between regulators and market participants, and launched a tender for a virtual asset accelerator, which has attracted a great deal of market attention and is currently under active study.

Three key focus clusters for the next 12 months

Next, let’s talk about our plan: what will the plan look like for the next roughly 12 months? I’d like to call on many practitioners in the market, including VATPs or license teams—we will also communicate with the SFC from time to time. I always ask them to do one thing: separate short-term goals from long-term goals. Put the long-term goals aside first—look at your top priorities first—then emphasize the urgent tasks that need to be completed. That’s exactly what we want to ensure: not only focusing regulatory resources, but also mobilizing the entire market’s resources to achieve short-term outcomes. And these outcomes, in turn, lay the groundwork for mid- to long-term goals.

Below are the very short-term tasks. From a regulatory perspective, we are planning ahead for the next 12 months, so I will divide it into three clusters.

First cluster: Shared destiny—regulatory framework rollout

First is shared destiny, achieved through regulation. As mentioned just now, we have completed the review of virtual asset trading and custody systems—on December 24—but we didn’t stop there. It’s more like “buy two, get two free.” So we are now conducting another consultation, which also provides room for market feedback, regarding the systems for virtual asset management and virtual asset advisory. Therefore, we have formulated four sets of systems in one go. I just received the drafts—received last week. I think you may find this interesting, because that 260-page document—if you want to set up a legislative committee, I understand your process involves going through it part by part. We might spend a few days together finishing that. I assure you that at the HKMA, my team and I will indeed handle them one by one. This 260-page draft is truly remarkable. It came from the work of the HKMA and it also required the joint efforts of the Department of Justice and the SFC to make it happen in such a short time. So let’s strive for this—and this is only the beginning, because there’s still a portion of work, and this is only legislation.

To enable authorized participants to participate, we also need regulatory guidance, the rules and details of the regulatory framework, so that market participants can use them to implement this. So we need to consult on that as well. This is a huge piece of work, which is why I’ve been talking with many of you to ensure we do it properly, while also listening to voices from the market. Meanwhile, we are also conveying the regulators’ perspective.

Another aspect is about achieving a dynamic approach to custody technology and insurance indemnity arrangements. I know that virtual asset insurance is a factor, and we have very strict requirements for it. We also need to think ahead about how to apply technology to adopt more pragmatic compensation arrangements, while at the same time not giving up the safety protections for investors.

Second cluster: Product innovation—tokenization and derivatives framework

Second is about products. This is what I said: innovation through practice. There are a few typical examples that can demonstrate this. We have actually issued 2–3 tokens as high-level frameworks for securities, but when we truly communicate with the market, each product has its own characteristics. And when you add the “umpires,” sometimes you will see certain false features, so it requires more thinking.

For example, an initiative that will be announced this afternoon is that we will allow virtual asset trading platforms to trade not only tokenized assets, but also all price funds. As far as we know, this is actually the first framework globally that allows a very predictable framework for trading tokenized assets on regulated platforms. We will start with experimental money market funds again, and if the experience is good, then we will expand to all authorized outlets in a step-by-step manner. This is what we are going to announce, but it actually requires months of discussion between us and the platforms and the fund managers.

We’ve been discussing these ideas for a long time, and we’ve also been discussing the market’s thoughts about financing and guarantees. We need to talk about how perpetual contracts are constructed, and how they fit into our regulatory framework. This is not a small matter. We’ve had extensive dialogue on this. At this stage, it also involves financing. We still need to consider capital adequacy ratios, which is another item related to the planning and consultation. Otherwise, it won’t have a unified approach, nor will it provide a way to mitigate capital burdens.

Third cluster: Interactive innovation—international cooperation and risk management

Third is through interactive innovation, which includes the crypto initiatives I mentioned. We are working with licensed participants to enable reporting automation, and to think about how to jointly manage 24-hour custody risks, market conduct risks, and automated platform risks. At the same time, we have been signing— or intend to sign—bilateral memoranda of understanding with many international jurisdictions. The reason is that now we do have common regulators that can supervise to avoid regulatory arbitrage. And we coordinate international practices.

Last but equally important is the blue rectangle: the framework or the answers. The “answers” are not just for the umpires; they can have far-reaching impact. In the ecosystem of umpires, this is something we’ve been exploring with the market—using a pragmatic approach to understand how the market operates, and how regulators can work with the automotive industry, together with investors, to crack down on financial crime.

Conclusion: Trust, balance, and moving forward together

I encourage all of you to pack your bags, take in the scenery, and enjoy yourselves—when we go together, there will be ups and downs. I think over the past year, we have also built a great deal of trust and empathy, establishing balance between regulators and the market—understanding market development, and having market practitioners, especially wealthy entrepreneurs and operators, understand the regulators’ perspective. Thank you very much! Wishing you a wonderful day. Thank you!