Hong Kong SFC Proposes Retail Trading for Tokenized Securities

Edgen Crypto

·Feb 04 2026, 12:24

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Key Takeaways

Hong Kong's Securities and Futures Commission (SFC) is considering a significant policy shift to permit secondary trading of tokenized securities for retail customers. This move, which builds on regulations established in 2023, could bolster the city's position as a digital asset hub and unlock new investment opportunities in Real World Assets (RWAs).

Retail Access Proposed: The SFC is drafting a circular to allow retail investors to trade tokenized securities, with an initial focus on tokenized money market funds, on licensed virtual asset platforms.
Consistent Regulation: The regulator is applying its "same business, same risk, same rules" principle, ensuring tokenized securities are governed similarly to their traditional counterparts.
Risk Management Focus: The SFC is emphasizing strict due diligence, requiring intermediaries to have robust business continuity plans for scenarios like lost tokens and to vet technology service providers.

SFC Proposes Retail Access to Tokenized Securities

Hong Kong’s securities regulator is actively considering allowing retail investors to participate in the secondary trading of tokenized securities on licensed virtual asset platforms. Elizabeth Law, Deputy Director of the Intermediaries Division at the Securities and Futures Commission (SFC), confirmed the regulator is currently drafting a related circular to formalize the rules. The initiative is part of a broader push to integrate digital assets into the mainstream financial system, with a specific initial focus on tokenized money market funds. The SFC has already conducted preliminary industry consultations on the new requirements, signaling a significant expansion from the current framework that largely limits access to professional investors.

'Same Risk, Same Rules' Framework Extends 2023 Policy

The proposed expansion is grounded in the SFC's established principle of "same business, same risk, same rules," which treats tokenized securities as fundamentally equivalent to traditional ones, simply with an added technology layer. This approach extends the logic from two key circulars issued in 2023 that set the foundation for tokenization activities by intermediaries and SFC-authorized products. Under this framework, the SFC is scrutinizing operational and technical risks. Regulators are focused on ensuring intermediaries conduct thorough due diligence on technology service providers and establish effective business continuity plans (BCPs) to manage potential issues, such as the loss of tokens.