Hong Kong fully opens up! Cryptocurrency exchanges connect with global liquidity, and multiple exchanges are vying for a foothold.

The Chief Executive Officer of the Hong Kong Securities and Futures Commission (SFC), Ashley Alder, announced during the Hong Kong FinTech Week that licensed crypto asset exchanges will soon be allowed to connect their Hong Kong entities with global order books, ending the current isolation model that restricts trading within Hong Kong. This move is part of a broader plan aimed at attracting crypto asset companies and aligning digital asset regulations with traditional finance markets.

Hong Kong ends trading isolation mode to connect with global liquidity

The Chief Executive Officer of the Hong Kong Securities and Futures Commission (SFC), Ashley Alder, stated that licensed crypto asset exchanges will soon be allowed to connect their Hong Kong entities with global order books, thereby ending the current system that restricts trading to within Hong Kong. According to a report by Bloomberg, this regulatory announcement to be released later will detail how the rules for digital assets will align with those for TradFi products.

This policy breakthrough is of great significance to the Hong Kong encryption market. Currently, licensed crypto exchanges in Hong Kong must operate independent order books locally and cannot directly access global liquidity pools, which leads to insufficient trading depth and excessive spreads, severely limiting the competitiveness of Hong Kong exchanges. The opening of the global order book means that Hong Kong exchanges can directly connect to the liquidity of overseas platforms, allowing users to enjoy the same trading depth and prices as the international market.

Mr. Leung said, “It can be said that we have taken a relatively tough stance. Once we are confident that we can protect investors, we will let our guard down—just like how we treat global liquidity issues.” This statement reveals the core logic of Hong Kong's regulatory strategy: first establish a strict investor protection framework, and then gradually open up market access. This gradual opening contrasts sharply with markets like the United States, where the market was allowed to grow wildly even when the regulatory framework was not clear.

This move marks an important step for Hong Kong in its efforts to become a regional digital asset center. Since 2022, the city has launched a comprehensive exchange licensing system, introduced exchange-traded products linked to Bitcoin and Ethereum, and approved digital asset funds. However, Crypto Assets trading activities still lag behind leading countries such as the United States, where President Trump's administration has taken a more friendly stance towards the Crypto Assets industry. The opening of global liquidity will be a key step for Hong Kong to narrow this gap.

Shortcut for Multiple Exchange Brokerage Licenses Exposed

In future stages, regulators may allow locally licensed crypto assets brokers (not just exchanges) to enter international liquidity pools. If approved, this rule could open the door for multiple exchanges to more easily enter the Hong Kong market through brokerage licenses, without the need to submit a full exchange application, which could take years to process.

This policy adjustment is highly strategic. Currently, applying for a complete exchange license in Hong Kong requires going through a long and complex review process, including capital requirements, technical system audits, and executive qualification reviews, among other steps. The entire process may take 2 to 3 years. In contrast, the application threshold and time cost for a broker license have been significantly reduced. If large international exchanges can quickly enter the Hong Kong market through a broker license, it will provide more options for local users and accelerate the internationalization of Hong Kong's crypto ecosystem.

Currently, 11 cryptocurrency exchanges hold a full license issued by the Hong Kong Securities and Futures Commission, while 49 brokers operate under a comprehensive account arrangement. The number of brokers far exceeds that of exchanges, indicating a demand in the market for a flexible access model. If brokers can also access global liquidity, these 49 institutions could become a channel for international funds entering Hong Kong.

Current Status of Crypto License in Hong Kong

Complete exchange license: 11 licensed, approval time 2-3 years, requires independent order book

Broker License: 49 operators, shorter approval time, currently more restrictions.

Coming Soon: Brokers will be allowed to access the global liquidity pool.

Multiple exchanges are the two largest platforms for global crypto trading volume. Their entry into Hong Kong will bring significant liquidity and user base. If mainstream exchanges quickly enter Hong Kong through brokerage licenses, it will create tremendous competitive pressure on the existing local exchanges, while also enhancing the overall service level of the market.

Stablecoin licensing and token listing rules relaxed

The Hong Kong Securities and Futures Commission is also finalizing a new framework for the licensing of crypto asset traders and custodians, while the Hong Kong Monetary Authority plans to issue the first batch of stablecoin licenses next year. The Hong Kong Securities and Futures Commission has also announced that it will relax the listing rules for new tokens and stablecoins approved by the Hong Kong Monetary Authority, removing the requirement for professional investors to have a 12-month performance record.

The introduction of a regulatory framework for stablecoins is another important pillar of Hong Kong's crypto strategy. Stablecoins, as a bridge connecting fiat currencies and the encryption world, are the core infrastructure for payments, DeFi, and cross-border settlements. Currently, the global stablecoin market value exceeds 200 billion USD, mainly dominated by American companies Tether and Circle. Hong Kong's launch of a stablecoin licensing system aims to nurture local stablecoin issuers and provide a compliant pathway for international stablecoins to enter Hong Kong.

The cancellation of the 12-month performance record requirement for professional investors is a significant breakthrough. Previously, new tokens had to prove that they had been operating in the professional investor market for at least 12 months and performing well in order to be listed on licensed exchanges in Hong Kong. While this requirement protected investors, it also significantly slowed down the listing speed of new projects. In the rapidly changing encryption market, a 12-month waiting period could mean missing the best listing opportunities. The relaxation of the new rules will enable the Hong Kong exchange to onboard popular projects more quickly, enhancing market activity.

LEAP Framework Leads Hong Kong's Digital Financial Strategy

Hong Kong has announced its second important policy statement regarding digital assets, placing stablecoin regulation and the tokenization of real-world assets (RWA) at the core of its strategy to become a global fintech hub. The new “LEAP” framework focuses on legal clarity, ecosystem growth, real-world applications, and talent development, with the stablecoin licensing system set to launch on August 1.

The four pillars of the LEAP framework represent Hong Kong's comprehensive planning for digital finance. Legal Clarity ensures that businesses and investors operate under a clear regulatory framework. Ecosystem Growth attracts global participants through a licensing system and market openness. Real-world Applications apply blockchain technology to traditional assets such as government bonds and real estate. Talent Development lays the foundation for long-term growth.

The government also plans to regulate tokenized government bonds and ETFs, paving the way for these products to be traded in the secondary market on licensed digital asset platforms. It aims to expand tokenization efforts into areas such as metals and renewable energy, highlighting application cases like gold and solar panels. This strategy of tokenizing traditional assets is precisely the differentiating advantage that Hong Kong has in competing with other crypto centers such as Singapore and Dubai.

LEAP Framework Four Pillars

Legal Clarity: A clear regulatory framework protects investors

Ecosystem Growth: The licensing system attracts global participants.

Real-world Applications: government bonds, real estate tokenization

Talent Development: Long-term development foundation

According to reports, professionals in the crypto assets and hedge fund industries play a crucial role in supporting the Hong Kong residential rental market, which continues to languish due to weak traditional demand sources. This detail reveals the actual contribution of the encryption industry to the Hong Kong economy, extending not only to the financial sector but also to traditional industries such as real estate.