Hong Kong Permits Crypto Margin Financing Using Bitcoin and Ether
What Is the SFC Allowing Now?
Hong Kong’s Securities and Futures Commission (SFC) on Wednesday unveiled a framework that will allow licensed virtual asset trading platforms to offer crypto perpetual contracts to professional investors. The move comes alongside separate guidance permitting licensed intermediaries to provide margin financing for crypto trading using a broader range of collateral.
Under the new framework, perpetual contracts will be limited to professional investors. Platforms offering the products must implement leverage limits, margin requirements, liquidation mechanisms and enhanced disclosures. The SFC said these contracts will remain under ongoing supervision, with firms required to demonstrate adequate internal controls.
In parallel, the regulator issued a circular clarifying that bitcoin and ether may be accepted as collateral for crypto-related financing, subject to client suitability checks and internal risk controls. The updated rules widen the scope for structured margin activity within the licensed regime.
Investor Takeaway
Why Is Liquidity the Central Focus?
In a speech at Consensus Hong Kong, SFC Executive Director of Intermediaries Eric Yip outlined the regulator’s priorities for the year, placing liquidity and market quality ahead of rapid expansion.
“[This] year’s focus is on liquidity — cultivating market depth, strengthening price discovery, and building investor confidence through a strategic blend of expanded access and responsible product innovation,” Yip said in remarks published by the SFC.
The regulator also clarified the conditions under which affiliated entities may act as market makers on licensed platforms. The framework requires governance safeguards, disclosure standards and surveillance measures to manage conflicts of interest while improving order book depth.
Tim Sun, senior researcher at HashKey Group, said the new initiatives address structural inefficiencies in the local market. The changes mark the point at which licensed exchanges have begun to “systematically address the long-standing issue” of liquidity fragmentation, he said. “By accessing global market depth through compliant channels, the market can improve efficiency and price quality, laying the groundwork for the next phase of commercial development,” Sun added.
How Do Market Participants View the Move?
Industry responses suggest the measures are viewed as calibrated expansion rather than a regulatory pivot. Sherry Zhu, global head of digital assets at Futu Group, said the firm sees the changes as deepening links between traditional securities infrastructure and digital assets.
“These initiatives, including cross-collateralization between virtual assets and traditional securities, the introduction of perpetual contracts for professional investors, and the permitting of affiliated market making, fully demonstrate Hong Kong’s continuous innovation in the regulation of virtual assets,” Zhu said in a statement.
The introduction of cross-collateralization between crypto assets and traditional securities could streamline capital usage for professional participants operating across asset classes. At the same time, the limitation of perpetual contracts to professional investors reflects continued caution around retail exposure to leveraged products.
Investor Takeaway
What Does This Mean for Hong Kong’s Crypto Ambitions?
Hong Kong has spent the past two years rebuilding its digital asset regime around licensed platforms, compliance standards and supervisory clarity. Allowing perpetual contracts for professional investors fills a gap in product offering compared with offshore venues, while keeping activity inside the local regulatory perimeter.
By pairing derivatives access with tighter risk management requirements and broader collateral guidance, the SFC is attempting to deepen market activity without loosening oversight. The framework gives licensed platforms room to compete for professional liquidity while reinforcing governance and surveillance standards.
