Last year, we saw a number of new initiatives in Hong Kong, including the Hong Kong Securities and Futures Commission’s (“SFC”) “A-S-P-I-Re” regulatory roadmap for the virtual asset market, the Hong Kong Monetary Authority’s (“HKMA”) “Fintech 2030” roadmap, and a new phase of Project Ensemble (a regulator-led initiative on advancing tokenisation).
As we enter into 2026, we look at eight key regulatory developments which we expect to shape Hong Kong’s financial market. If you have any questions on these developments, please contact our team.
1. New virtual asset dealing, custodial, advisory and asset management regimes
The Hong Kong Financial Services and the Treasury Bureau (“FSTB”) and the SFC concluded their joint consultations on the new virtual asset dealing/custodial regulatory regimes in December. The draft legislation is expected to be introduced to the Legislative Council in 2026, with the regime broadly mirroring the securities regime under the principle of “same activity, same risks, same regulation”. In addition, the FSTB and the SFC will also continue consulting on a new virtual asset advisory and management regime. For more details, please see our client briefing for our five key takeaways on the new regimes. Firms should begin assessing readiness for these changes as legislative steps progress.
2. First stablecoin licences to be granted by the HKMA
The HKMA licensing regime for stablecoin issuers came into effect in August, marking a significant step in regulating digital assets. Applications for the first batch of licences closed in September, and the HKMA is expected to grant the initial licences in early 2026. The framework imposes stringent requirements on capital adequacy, reserve backing, governance, and AML/CFT compliance, reflecting the regulator’s cautious approach to safeguarding financial stability.
3. SFC to conclude its consultation on financial resources rules for OTC derivatives
We anticipate the SFC to conclude its consultation on the financial resources rules for OTC derivatives in 2026. The proposed requirements will have an impact on OTC derivative service providers, including asset managers with a central dealing desk and broker dealers. As the consultation is likely to be the last hurdle before implementation of the OTC derivatives licensing regime, we may see further updates on the timeframe for implementation of the Type 11 (dealing in OTC derivative products or advising on OTC derivative products) and Type 12 (providing client clearing services for OTC derivative transactions) regulated activities. Firms should review potential impact before the consultation conclusions.
4. Cybersecurity to remain in the headlines
We expect cybersecurity to remain in the headlines for 2026. The Protection of Critical Infrastructures (Computer Systems) Ordinance came into effect on 1 January 2026, imposing statutory requirements on designated critical infrastructure operators to protect their computer systems from cyberattacks. The SFC has previously indicated that it will be comprehensively reviewing existing cybersecurity requirements and developing an industry-wide cybersecurity framework. The HKMA is preparing the industry for a post-quantum cryptography (PQC) world, focusing on a new fintech-specific cybersecurity certification framework and a new system of early detection through real-time analysis. We are also awaiting further developments to the proposed reforms to the Personal Data (Privacy) Ordinance, which includes a mandatory data breach notification regime.
5. Product offering to be further expanded
Hong Kong is accelerating efforts in tokenisation and digital asset innovation. The HKMA’s new phase of Project Ensemble continues to facilitate trials of tokenised deposits and assets for interbank settlement and cross border transactions, while the SFC and HKMA have issued guidance on tokenised products, emphasising risk management, custody arrangements, and cybersecurity. The successful issuance of tokenised green bonds under Project Evergreen demonstrates the viability of these frameworks. Looking ahead, we expect further development of tokenised funds, green finance products, and cross border settlement solutions in 2026, in line with the HKMA’s “Fintech 2030” roadmap.
6. Further proposals to enhance Hong Kong’s asset management industry
The SFC is consulting on proposed amendments to the Code on Unit Trusts and Mutual Funds to align Hong Kong’s requirements with international standards and strengthen investor protection. Key areas under review include new approaches for managing derivatives in retail funds, updated liquidity risk management requirements, and enhanced rules for money market funds. In parallel, the government is considering potential tax reforms that may broaden the scope of profit tax exemptions for qualifying asset management activities, subject to consultation and legislative process.
7. More regulatory initiatives and guidance to support AI adoption
As Hong Kong does not have a cross-sector omnibus artificial intelligence (“AI”) legislation, we expect further guidance and best practices to be issued from regulators and industry bodies to guide market participants on responsible AI adoption. In particular, we anticipate further industry engagement on the SFC’s circular on use of generative AI language models (e.g., due diligence of AI providers and high risk usage of AI) and a drive by the HKMA to promote AI adoption under their “Fintech 2030” roadmap (e.g., in the AML/KYC space). Firms looking to launch new AI products should seek advice on how various AI requirements apply.
8. Key enforcement action to watch out for in 2026
Finally, following the SFC’s enforcement activities last year, we expect continued enforcement focus on banks, broker dealers and asset managers. One notable enforcement case scheduled for trial in mid-2026 involves allegations of insider trading by an asset manager in relation to a block trade in a Hong Kong-listed company. The case will be heard at the District Court between May and June 2026.
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