Hong Kong

Important Aspects	Details about Hong Kong
Asset issuance rules	Hong Kong provides specific rules for asset issuance, especially for tokenized securities. Issuers need to comply with traditional securities laws, and issuance must be conducted under regulatory oversight. This includes registration, offering disclosures, and adherence to AML (Anti-Money Laundering) and CTF (Counter-Terrorist Financing) requirements.
Clarity over resale	Tokenized securities are treated like traditional securities with a "tokenization wrapper." The resale must comply with existing securities market regulations. The "same business, same risk, same rule" approach applies to ensure that tokenized assets meet the same standards and investor protections as traditional assets.
Clarity over trading	Only "eligible large-cap" virtual assets are allowed for trading in Hong Kong. These assets must be listed in at least two acceptable indices from different providers. Hong Kong prioritizes consumer protection and has set guidelines for stablecoins and other tokenization use cases. All trading activities must adhere to the relevant securities and futures regulations.
Custody requirements	Custody of digital assets in Hong Kong is regulated under the framework for intermediaries dealing with tokenized securities. The Hong Kong Monetary Authority (HKMA) outlines key considerations for institutions using Distributed Ledger Technology (DLT) in business activities. Institutions must ensure proper risk management, transparency, and security of assets.
Dispute resolution	The Court of First Instance of the High Court in Hong Kong ruled in March 2023 that cryptocurrencies are considered "property" under Hong Kong law and can be held in trust. This provides a clear legal standing for digital assets and sets a precedent for resolving disputes related to ownership, control, and rights over digital assets
Promoting digital assets	Promotion of digital assets must follow traditional securities regulations, especially when dealing with tokenized securities. While specific restrictions on promotion aren't detailed, intermediaries must operate within the existing legal framework to ensure that promotional activities do not mislead investors or breach securities laws
Filing issuance process	Issuers need to obtain a license from the Securities and Futures Commission (SFC) for engaging in tokenized securities activities. The policy statement outlines a licensing regime for centralized VA (Virtual Asset) service providers to trade specific virtual assets. The licensing process requires strict adherence to legal and regulatory requirements
VASP takeaways	Hong Kong focuses on consumer protection in digital asset services. Licensed intermediaries must treat tokenized securities as traditional ones. Risk management is key, particularly for DLT-based services. Digital assets are legally recognized as "property."
Issuer takeaways	Tokenized securities are subject to traditional securities laws. Issuers must obtain a license for operations. Only large-cap virtual assets are eligible for trading. Robust risk management is required, including maintaining reserves for stablecoins