The Securities and Futures Commission (SFC) of Hong Kong has issued fresh regulatory guidance for licensed virtual asset trading platforms (VATPs) and SFC-authorized funds with exposure to virtual assets (VA Funds), aimed at overseeing their provision and engagement in staking services.

The move marks a significant step in the regulator’s broader strategy to develop Hong Kong into a leading hub for virtual assets, aligning with its "ASPIRe" roadmap—an initiative that focuses on building an adaptable, secure, and transparent virtual asset ecosystem.

In a circular released today, the SFC acknowledged the benefits of staking, such as strengthening blockchain network security and enabling investors to earn yields in a regulated setting. The guidance is designed to balance innovation with investor protection.

Under the new framework, licensed VATPs offering staking services are required to implement safeguards to protect client assets. These include effective risk management to prevent operational errors; robust custody arrangements for staked virtual assets; and transparent risk disclosures to clients regarding the potential vulnerabilities of staked assets.

The regulator also updated its earlier guidance for VA Funds, allowing them to participate in staking under strict conditions. These funds must stake virtual assets only through licensed VATPs or other authorized institutions. Additionally, a cap has been introduced to mitigate liquidity risks associated with staking activities.

Commenting on the update, SFC CEO Julia Leung emphasised the importance of maintaining strong safeguards as the market evolves.

“Broadening the suite of regulated services and products is crucial to sustain the healthy advancement of Hong Kong’s virtual asset ecosystem,” Leung said. 

“But the broadening must be done in a regulated environment where the safety of client virtual assets continues to be front and center of the compliance framework for offering such service.”

The SFC’s latest guidance is expected to offer greater clarity to industry participants while reinforcing investor confidence in the virtual asset market through a regulated and transparent approach.