HashKey Research Institute: ASPIRe roadmap accelerated, multiple measures taken to break down liquidity "islands"

At the recently held Consensus Hong Kong Conference, the Hong Kong Securities and Futures Commission (SFC) released a series of positive signals, clearly stating that it will promote the implementation of margin financing, perpetual contracts and related market maker systems, and further improve the market mechanisms and tool system of licensed virtual asset trading platforms.

This series of policy measures is not simply a loosening of regulations, but a substantial response to and implementation of Hong Kong's "ASPIRe" roadmap for the development of virtual assets. It also signifies that Hong Kong's licensed exchanges have begun to systematically address the long-standing issue of liquidity silos , accessing global liquidity through compliant pathways, improving market efficiency and price quality, and laying the foundation for the next stage of commercial development.

Deepening the "Access" strategy: Breaking down liquidity silos within a compliance framework .

Back in November of last year, the SFC issued a circular announcing that, under strict compliance conditions, licensed virtual asset trading platforms would be allowed to share their order books with qualified global affiliates. This arrangement laid the institutional foundation for Hong Kong's market to access global liquidity.

In the ASPIRe roadmap, A (Access) represents access and connectivity. This goal may seem abstract, but for exchanges, it points to a very specific question: how can liquidity be scaled up within a compliant framework to make the market truly usable?

For a long time, Hong Kong-licensed virtual asset trading platforms have been limited to facilitating transactions only within local licensed entities. While compliance and security are guaranteed, issues such as insufficient trading depth, large spreads, and weak trading continuity may still arise in the actual trading experience, especially in large-scale transactions. This not only affects the efficiency of institutional fund inflows and outflows but also, to some extent, restricts the commercial sustainability of licensed platforms.

In its circular last November, the SFC explicitly stated that platform operators could integrate their order books with those of their globally affiliated platforms, subject to stringent conditions. This means that in the future, when Hong Kong investors trade on licensed platforms such as HashKey Exchange, their orders will have the opportunity to be matched within a broader pool of compliant liquidity, thereby achieving depth and price continuity closer to mainstream global markets and further enhancing the trading experience and market pricing quality. For institutions with a global compliance footprint, this arrangement represents not only a breakthrough at the regulatory level but also provides a clearer compliance path for internal liquidity coordination.

Enriching Tools and Mechanisms: Building a Multi-Dimensional Market In-Depth Support System

If the shared listing register solved the fundamental issue of liquidity depth, then the three other major initiatives announced at today's meeting—margin financing, perpetual contracts, and the affiliated market maker scheme—further address the issues of liquidity efficiency and sustainability.

By combining these three policies with the previously announced shared liquidity, we can more clearly understand SFC's overall approach— to further improve the market mechanisms and tools that support liquidity, building upon the existing liquidity access. However, this time it's not just about laying out access paths; it also includes targeted supplements at the product level.

1) The breakthrough in margin financing lies in the expansion of collateral, allowing securities and mainstream virtual assets such as Bitcoin and Ethereum to be used as collateral. This means that investors can improve the efficiency of cross-asset class capital utilization, enhance allocation flexibility, and improve risk management efficiency, all while remaining compliant. Although virtual asset collateral is currently only available for Bitcoin and Ethereum, and prudent deduction rates are applied according to traditional financial standards (currently requiring a discount rate of at least 60%), this signifies that traditional finance and virtual assets are beginning to achieve genuine synergy at the account level, laying the foundation for deeper asset integration in the future.

2) The high-level framework for perpetual contracts fills a gap in the risk management framework for professional institutional investors, a long-awaited positive development. The high-level regulatory framework to be announced by the SFC will allow licensed platforms to offer perpetual contract products. Although this service is currently limited to professional investors and places extremely high demands on platforms regarding volatility rates, automatic liquidation risk management, and transparency, its significance is immense. It fills a gap in the Hong Kong licensed market's derivatives sector to some extent, enabling institutional investors to conduct effective hedging and arbitrage within a compliant environment, and improving the market's price discovery mechanism.

In particular, the policy explicitly stipulates that margin collateral must be fiat currency or stablecoins and tokenized deposits regulated by the Hong Kong Monetary Authority. This not only excludes high-risk tokens as margin but also forms a policy loop with Hong Kong's stablecoin licensing and Project Ensemble (tokenized deposit) programs. It also requires platforms to establish transparent funding rate mechanisms, insurance funds, and automatic leveraged liability (ADL) mechanisms, and prohibits them from providing margin credit to customers, ensuring market stability under extreme volatility.

3) The associated market maker system allows licensed platforms to conduct market-making business independently, provided they establish strict conflict-of-interest management and functional independence. This is an important supplement to market stability. This endogenous market-making capability can effectively cooperate with third-party market makers to maintain order book continuity during extreme market conditions or periods of low activity, avoiding liquidity vacuums. At the same time, regulators have emphasized the principle of customer priority, requiring that customer orders take precedence over market maker orders at the same price level, and requiring platforms to submit review reports issued by independent professional companies to further ensure market fairness.

These three elements complement each other—addressing both the depth of trading and its sustainability, while further refining the tools and mechanisms required for professional trading. For the Hong Kong market, this means that licensed trading platforms are gradually evolving from simple compliant trading gateways to possessing the trading and risk management capabilities required by mature financial markets, thus becoming more attractive to long-term, professional, and compliant institutional capital.

Prudent and proactive policy approach: Investor protection and safe and stable operation have always been the hallmarks of Hong Kong's regulatory system.

It is worth emphasizing that while promoting liquidity upgrades, the SFC has not relaxed its requirements for risk management. The circular issued last year set clear and prudent compliance thresholds for shared liquidity. For example, overseas affiliated platforms participating in shared liquidity listings must be located in FATF member countries or equivalent jurisdictions and have a regulatory framework similar to IOSCO principles and Hong Kong regulatory standards; all transactions must be fully prepaid and settled through a direct payment versus payment (DVP) mechanism; simultaneously, platforms must establish trust-based reserve arrangements and corresponding insurance mechanisms to address potential extreme settlement risks.

The same regulatory approach is also reflected in the recently promoted margin financing, perpetual contracts, and related market maker mechanisms. Whether it's the prudent deduction rate set for margin financing, the professional investor threshold for perpetual contracts, or the strict conflict-of-interest management requirements for related market makers, these measures not only demonstrate the SFC's determination to incorporate virtual assets into the mainstream financial regulatory system, but also show that Hong Kong's regulation consistently prioritizes investor protection and the sound operation of the market.

This also means that Hong Kong is not simply replicating the high leverage or aggressive models of other markets, but rather choosing to gradually introduce relevant mechanisms based on mature financial regulatory experience to ensure that the market maintains a sustainable and predictable development path while improving efficiency and liquidity.

In summary, with the continued rollout of ASPIRe , Hong Kong's virtual asset market is moving towards a more mature stage.

In summary, the SFC's latest policy move is not a short-term measure to stimulate trading volume, but rather a systemic upgrade to the structure of the virtual asset market. By facilitating global liquidity under compliance and coupled with a rigorous risk control and market surveillance framework, Hong Kong is building a more robust and scalable infrastructure for the long-term development of the virtual asset market.

Chairperson Leung Fung-yee also pointed out that tokenized assets have developed rapidly over the past year, making significant progress in multiple areas. Furthermore, regarding the regulatory roadmap, the Hong Kong Securities and Futures Commission has released its consultation conclusions on virtual asset trading and custody, and plans to collaborate with the Hong Kong SAR government to submit relevant legislative proposals this year.

For HashKey Exchange, this change in the policy environment signifies that its long-standing commitment to compliance is beginning to bear fruit. With its dual-track strategy of Hong Kong and global expansion, HashKey will further evolve into a financial hub with comprehensive capabilities in spot and futures trading, fiat and token transactions, and trading and financing. This not only expands its business scope but also upgrades its underlying capabilities. This will enable HashKey to be among the first to capitalize on the next phase of explosive growth in the industry—the large-scale implementation of the real-world on-chain transfer of traditional financial assets—and to meet the entry demands of compliant global capital.

The ASPIRe roadmap is moving from planning to implementation. Under a regulatory logic that prioritizes both security and efficiency, Hong Kong's virtual asset market is steadily progressing towards a more mature and sustainable development stage.

Author: Tim Sun, Senior Researcher, HashKey Group

Reference: https://apps.sfc.hk/edistributionWeb/gateway/TC/circular/intermediaries/supervision/doc?refNo=25EC56