On 27 May 2026, the Securities and Futures Commission (SFC) issued an updated circular amending its requirements for SFC-authorised funds with exposure to virtual assets. The amendment clarifies that exposure to fiat-referenced stablecoins issued by entities licensed under the Stablecoins Ordinance does not count toward the 10% net asset value threshold that triggers enhanced authorisation requirements for public-offering funds. This update supports the SFC's initiative permitting secondary trading of tokenised SFC-authorised investment products on licensed virtual asset trading platforms (VATPs), with settlement conducted using regulated stablecoins and tokenised deposits.
The SFC Circular on SFC-authorised funds with exposure to virtual assets had previously set the conditions under which public-offering funds with more than 10% of net asset value in virtual assets required specific SFC authorisation. The 27 May 2026 amendment creates a carve-out: fiat-referenced stablecoins issued by Stablecoins Ordinance licensees are treated as settlement instruments and excluded from the virtual asset NAV calculation. Tokenised deposits eligible for settlement under the secondary trading initiative must be issued by regulated Hong Kong financial institutions. The SFC has not published an exhaustive list of stablecoin issuers currently licensed under the Stablecoins Ordinance.
Fund managers operating SFC-authorised public-offering funds that hold or accept licensed stablecoins for settlement or liquidity management must recalculate their virtual asset NAV exposure to determine whether the carve-out applies and whether enhanced authorisation requirements remain engaged. Asset managers who wish to participate in the secondary trading initiative for tokenised investment products must list those products on, or through, a licensed VATP. Managers and platform operators cooperating on tokenised product listing arrangements must review investor terms, settlement procedures, and disclosure documents to reflect the use of stablecoins and tokenised deposits as settlement assets.
As of March 2026, 13 tokenised SFC-authorised products were available for public offering in Hong Kong, with assets under management in tokenised share classes rising approximately seven-fold over the preceding year to HKD 10.7 billion. The SFC and the Hong Kong Monetary Authority jointly ran Project Ensemble, which simulated a tokenised money market fund's dealing and trading cycle using tokenised deposits. Fund managers and platform operators should verify stablecoin issuer licence status under the Stablecoins Ordinance before classifying a stablecoin as eligible for the settlement carve-out.
Licentium advises on virtual asset regulatory compliance in Hong Kong and other jurisdictions and can draw on a partner network for Hong Kong-specific legal counsel. Fund managers assessing the impact of the updated SFC circular on portfolio construction, VATP operators evaluating tokenised product listing arrangements, and stablecoin issuers seeking to qualify their instruments for the settlement carve-out are welcome to contact us. Work we undertake includes SFC fund authorisation and compliance, VATP licensing support, stablecoin issuer regulatory strategy, and tokenised product structuring.