Hong Kong is solidifying its position as a regional crypto hub by greenlighting crypto margin financing and outlining a framework for perpetual trading. The Securities and Futures Commission (SFC) of Hong Kong announced on Wednesday that licensed brokers can now provide virtual asset margin financing services. Furthermore, the SFC has established a framework for virtual asset trading platforms (VATPs) to offer perpetual contracts to professional investors. These initiatives represent a significant step in Hong Kong's broader strategy to cultivate a comprehensive virtual asset ecosystem.
The SFC's decision to allow margin financing will enable licensed brokers to offer financing to clients with strong credit profiles, using both securities and virtual assets as collateral. Initially, the SFC will limit acceptable collateral to Bitcoin and Ether, the two largest cryptocurrencies by market capitalization, to account for volatility. These arrangements will be subject to the same risk management standards applied to traditional securities margin lending, including stringent haircuts. The SFC believes this will allow qualified margin clients to participate more actively in virtual asset trading while maintaining market stability through risk-controlled measures.
In addition to margin financing, the SFC has outlined a framework for licensed VATPs to develop leveraged perpetual contracts. Perpetual contracts, which have no expiration date, will be available exclusively to professional investors. Platforms offering these contracts must adhere to strict risk management measures, including leverage limits, margin requirements, and liquidation mechanisms. They must also provide enhanced disclosures and maintain adequate internal controls, subject to ongoing regulatory supervision. The SFC will also permit affiliates of licensed platforms to act as market makers, provided they implement robust governance, disclosure, and surveillance safeguards to mitigate conflicts of interest.
Eric Yip, the SFC's Executive Director of Intermediaries, emphasized the importance of these initiatives in scaling Hong Kong's digital asset market. Speaking at Consensus Hong Kong 2026, Yip stated that the SFC's structured development approach, based on the ASPIRe Roadmap, demonstrates the SFC's commitment to developing Hong Kong's digital asset market in a sustainable and collaborative manner. He likened Hong Kong's virtual asset ecosystem to a shopping mall, with the new initiatives acting as the "shops and goods" that attract users. Julia Leung Fung-yee, CEO of the SFC, stated at Consensus 2026 that the agency is committed to building a complete regulatory ecosystem for virtual assets.
These new measures build upon Hong Kong's broader crypto policy rollout. In January 2026, authorities announced plans to submit a draft ordinance covering crypto advisory services, alongside updates tied to the Organisation for Economic Co-operation and Development's (OECD) Crypto-Asset Reporting Framework (CARF). The Hong Kong Monetary Authority (HKMA) is also processing license applications for stablecoin issuers. Financial Secretary Paul Chan remarked at Consensus Hong Kong 2026 that Hong Kong continues to enhance its regulatory framework for digital assets, including the launch of a regulatory regime for stablecoin issuers in August of last year.
The introduction of margin financing and perpetual contracts, while initially limited to professional investors and certain cryptocurrencies, signifies Hong Kong's intent to compete with other crypto-friendly hubs and establish itself as a leading center for digital asset innovation. The SFC's focus on liquidity, risk management, and investor protection underscores its commitment to fostering a sustainable and well-regulated virtual asset market.