Hong Kong Treasury Bureau: Approval process for digital asset licenses is accelerating in an orderly manner, regulatory sandbox promotes financial innovation.

On July 30, the Secretary for Financial Services and the Treasury of Hong Kong, Christopher Hui Ching-yu, responded to questions from Legislative Council members, stating that since the rapid licensing procedure was implemented, the scope has expanded rapidly to include all new applicants for digital asset trading platform licenses. The authorities will continue to review the applications for digital asset trading platform licenses to promote the operation of more operators with different backgrounds in Hong Kong. Christopher Hui pointed out that as of early July 2025, the Securities and Futures Commission (SFC) had officially issued licenses to 11 digital asset trading platforms from both local and overseas, and was processing nine additional license applications. The time required for the SFC to process applications for digital asset trading platform licenses varies depending on several factors, such as the completeness of the information provided by the applicant, the completeness of the supporting documents provided by the applicant, and the time needed for the applicant to respond with further information during the SFC's assessment process. Based on the actual experience in processing applications for digital asset trading platform licenses, the SFC periodically reviews and optimizes relevant procedures to help applicants better understand the regulatory expectations of the SFC and shorten the time needed for the evaluation of license applications. Therefore, from June 2024, the SFC has implemented a rapid licensing procedure that includes risk-based on-site inspections for applicants considered for licensing as digital asset trading platforms, allowing direct communication between senior management and ultimate controller of the relevant applicants regarding regulatory standards, reducing the time needed to issue the relevant licenses. Subsequently, from January 2025, the rapid licensing procedure was expanded to all new applicants for digital asset trading platform licenses. Under the rapid licensing procedure, digital asset trading platform applicants are required to first implement internal policies, procedures, systems, and monitoring measures, and then have these measures externally assessed. The SFC will be a party to the agreement to oversee the entire external assessment process. In addition, to encourage financial innovation, regulatory agencies such as the Hong Kong Monetary Authority (HKMA), the SFC, and the Insurance Authority (IA) have established different regulatory sandbox mechanisms to allow tokenization, blockchain, generative artificial intelligence, and insurance technology to test innovative use cases in a risk-controlled environment before actual application and obtain technical support and regulatory opinions from regulatory agencies. When designing sandboxes, regulatory agencies refer to domestic and foreign experience to create a healthy and sustainable market environment, assisting financial institutions in seizing opportunities and responsibly adopting financial technology. In terms of tokenization development, the government issued green bonds twice in 2023 and 2024 in tokenized form, demonstrating the benefits of tokenization and receiving market approval. These two bond issuances were respectively the world's first batch of government tokenized green bonds and the world's first batch of multi-currency digital-native tokenized bonds. The government has announced in the 2025-26 Budget that the issuance of tokenized bonds will be normalized, and the HKMA is currently preparing for the third issuance. The government understands the potential of traditional financial products and tokenizing real-world assets. It also notes the increasing interest of financial institutions in tokenizing traditional financial instruments and the growing number of intermediaries distributing tokenized securities to clients. Based on the above foundation, the SFC approved the first tokenized investment product available for retail investors in Hong Kong in 2024. This gold token allows investors to purchase partial ownership of physical gold. The SFC also approved the first three tokenized currency market funds in the Asia-Pacific region in the first quarter of 2025, with the total assets under management of these funds exceeding HK$700 million by the end of March 2025. At the same time, the HKMA's Ensemble project actively encourages innovative application scenarios, including tokenizing traditional financial products (such as currency market funds and other funds) and revenue streams from real-world assets (such as electric vehicle charging stations). The SFC is also a key partner in the Ensemble project, jointly promoting the widespread application of tokenization in the asset management industry with the HKMA. The HKMA is also exploring the establishment of innovative financial market infrastructure and providing unified technical foundations to facilitate the settlement of interbank tokenized deposits.