SFC Sets Standards for Licensed Platforms Dealing in Regulated Stablecoins

The Securities and Futures Commission (SFC) published a circular on May 27, 2026, outlining expected standards for licensed virtual asset trading platforms (VATPs) and licensed corporations when dealing in stablecoins that meet the definition of "Relevant Stablecoins" under the Stablecoins Ordinance (Cap. 656). The circular applies only to stablecoins that qualify as specified stablecoins under the ordinance and are issued by an entity licensed by the Hong Kong Monetary Authority (HKMA).

The HKMA began licensing stablecoin issuers on August 1, 2025, and has granted two licenses as of April 10, 2026. Recognizing that regulated stablecoins pose different risks than other virtual assets, the SFC exempted them from liquidity and index requirements previously applied to retail-traded tokens.

These requirements were designed to protect retail investors from market manipulation and lack of transparency, but the SFC considers such risks mitigated by HKMA oversight of reserve backing and redemption arrangements. VATPs and licensed corporations must make clear disclosures about the stabilization mechanism and redemption arrangements of Relevant Stablecoins.

For clients who trade only in these stablecoins, firms may waive the usual assessment of virtual asset knowledge, but should consider the client's objective for trading. Holdings of Relevant Stablecoins are excluded from exposure limit calculations for non-institutional clients. When soliciting or recommending a stablecoin, firms must consider the client's use case and available alternatives, and cannot base recommendations primarily on commission rebates.

Licensed corporations may now partner directly with HKMA-licensed stablecoin issuers for dealing services, in addition to partnering with VATPs. The SFC also permitted licensed corporations to use omnibus accounts with VATPs that hold a professional investor-only licensing condition, enabling indirect retail access through intermediaries.

Deposit and withdrawal arrangements for client stablecoins can now be conducted through segregated accounts with the relevant stablecoin issuer, provided the issuer offers custody services with asset segregation. VATPs and corporations do not need prior SFC approval to include Relevant Stablecoins for trading, but must notify the SFC in writing before admitting, suspending, or removing any such stablecoin. Firms must update internal policies and disclosures to comply with the circular.