<div id="readability-page-1"> finews.asia sat down with Edison Chan, head of legal and compliance at Sygnum Asia, to unpack Hong Kong's sweeping virtual asset reforms — from the new Stablecoins Ordinance to licensing frameworks for OTC dealers and custodians — and what the completion of the city's regulatory architecture means for institutional and private wealth capital across Asia-Pacific. <hr/> Mr. Chan, Hong Kong has been on a regulatory sprint. For readers who may have lost track, can you summarize where things stand today? The pace of change has been remarkable, and the architecture matters before getting into the detail. Prior to 2023, the Securities and Futures Commission's jurisdiction over virtual assets was confined to those qualifying as securities or futures — which excluded most tokens, including bitcoin and ether. The shift began with Hong Kong's landmark Policy Statement on Virtual Assets in October 2022, followed by the June 2023 licensing framework for Virtual Asset Trading Platform Operators (VATPs). That brought exchanges dealing in both security and non-security tokens under the Securities and Futures Ordinance and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance regimes, and opened an uplift pathway for existing SFC licensees to offer virtual asset brokerage, advisory, and management services. By 2025, the regulatory perimeter had expanded well beyond exchanges. The Stablecoins Ordinance passed in May 2025 and came into effect in August, establishing a licensing and reserve framework for stablecoin issuers under the Hong Kong Monetary Authority (HKMA). Simultaneously, the Financial Services and the Treasury Bureau and the SFC published consultation proposals to regulate virtual asset dealing and custodian services. By December, they confirmed their intention to introduce a 2026 bill covering dealers, custodians, advisers, and managers through amendments to the AML/CTF Ordinance. Hong Kong has moved from regulating one segment of the market to building a comprehensive, end-to-end regulatory architecture — one the industry has broadly welcomed as a foundation for institutional trust. Let's go deeper on the Stablecoins Ordinance. Why does it matter, and what does it actually require? The Stablecoins Ordinance is a cornerstone of Hong Kong's ambition to become a global Web3 hub. Its significance lies in transitioning digital assets into a regulated, institutional-grade financial pillar. The ordinance establishes a licensing framework for stablecoin issuers and service providers, with robust requirements for reserve management, redemption rights, risk controls, and governance, all administered by the HKMA. As of April 2026, the HKMA has officially granted the first batch of stablecoin issuer licenses to two entities: HSBC and Anchorpoint Financial, a joint venture led by Standard Chartered. This followed a rigorous sandbox period that involved 36 applicants — reflecting a highly selective approval process focused on institutional track record. <blockquote> «Asian private wealth has moved well past the question of whether to allocate to digital assets, and is now focused on how to do so through trusted channels.» </blockquote> Turning to the OTC dealer and custodian consultations — why is the proposal to extend licensing beyond trading platforms considered a pivotal development? The proposals close the gaps left by a regime focused primarily on centralized exchanges. The expanded virtual asset dealing definition is deliberately broad — covering OTC dealers, digital platforms, and mixed-mode operations, encompassing everything from simple token-to-fiat conversions to block trading and the marketing of virtual asset products to Hong Kong residents from abroad. Virtual asset advisory and management are also captured, mirroring the standards applied to SFC Type 4 and Type 9 licensees — meaning anyone advising on or managing non-security tokens will be held to the same bar as traditional financial advisers and fund managers. And for the first time, virtual asset custody is recognized as a standalone, high-risk financial service in its own right. Licensees will be required to maintain cold storage or multi-signature solutions, strictly segregate client assets, and carry insurance or equivalent risk mitigation. This is institutional-grade infrastructure — the kind that only well-regulated financial institutions can credibly provide. Is this approach unique to Hong Kong, or does it reflect a broader international convergence? Major financial centers are converging on the same destination: comprehensive, ecosystem-wide frameworks that bring all material participants under supervision, not just exchanges. Hong Kong's distinction is its deliberate sequencing — trading platforms first, then institutional-grade products such as Asia's first virtual asset spot ETFs, then stablecoins, OTC dealers, custodians, and advisers. Measured, but consistently in one direction. The closest parallel is the EU's Markets in Crypto-Assets Regulation (MiCAR), which established a single harmonized framework covering issuers, exchanges, custodians, and brokers under a «same activity, same risks, same regulation» principle. Hong Kong's framework mirrors that philosophy almost exactly — and it is one Sygnum knows well, having pursued its MiCAR-compliant market entry in Europe. What both frameworks ultimately demand is not unprecedented. Segregate client assets. Manage private keys securely. Maintain robust AML/KYC frameworks. Govern with transparency. These are the standards responsible operators have always applied. <blockquote> «HNWI clients are not deterred by regulation — they are deterred by its absence.» </blockquote> Your APAC high-net-worth investor report showed extraordinary appetite from Asian private wealth for digital assets. Does stronger regulation help unlock that demand? Sygnum's APAC study found that 90 percent of respondents now consider digital assets important for long-term wealth preservation and legacy planning — but that confidence is conditional on institutional-grade safeguards existing in the first place. Asian private wealth has moved well past the question of whether to allocate to digital assets, and is now focused on how to do so through trusted channels. The licensing of virtual asset custodians and OTC dealers in Hong Kong will directly address the counterparty risk that has kept significant institutional capital on the sidelines. Equally important is what regulation unlocks further up the value chain. Wealth managers, private banks, external asset managers, and family offices in Hong Kong and across the region have been constrained from offering digital asset solutions not by lack of demand, but by the absence of a regulated counterpart to transact and custody with. Once intermediaries can access regulated execution and safekeeping, digital assets move from being a niche allocation handled outside the wealth structure to an integrated component of portfolio construction — alongside equities, fixed income, and alternatives. Critics argue that aggressive licensing requirements could push activity to less-regulated jurisdictions. How do you respond? That argument has historically been used to resist every significant financial regulation — from the Financial Action Task Force travel rule to MiCAR. In each case, the opposite proved true over the medium term. The EU's experience under MiCAR is instructive: 80 percent of European crypto users now use regulated custodial wallets instead of self-hosted wallets, and major international players — including Coinbase, Bitstamp, OKX, and Crypto.com — have applied for and obtained licenses. Over 30 percent of institutional investors in the EU increased their exposure to digital assets following MiCAR's implementation, and MiCAR-compliant businesses saw a 45 percent increase in institutional investment compared to non-compliant platforms. What tighter rules do in practice is eliminate the race to the bottom. The firms that remain and thrive will be those with genuine compliance cultures and real operational substance. <blockquote> «Once intermediaries can access regulated execution and safekeeping, digital assets move from being a niche allocation to an integrated component of portfolio construction.» </blockquote> Finally, where do you see Hong Kong's virtual asset regulatory landscape in two years' time? The SFC's regulatory roadmap is built around a five-pillar framework — Access, Safeguards, Products, Infrastructure, and Relationships (ASPIRe) — and Hong Kong's virtual asset ecosystem is becoming increasingly attractive to the institutional capital that will ultimately define the industry's scale. Once the 2026 bill passes, Hong Kong will have regulatory coverage across trading platforms, stablecoin issuers, OTC dealers, custodians, advisers, and asset managers — a framework that mirrors the full breadth of traditional financial services regulation. For wealth managers, family offices, and institutional allocators in the region, the regulatory clarity now taking shape removes one of the last structural barriers to meaningful digital asset allocation. Sygnum is actively considering establishing a presence in Hong Kong. The alignment of robust regulatory standards with the needs of institutional investors makes the city an increasingly attractive market for Sygnum's continued Asia-Pacific expansion, driven out of Singapore. <hr/> Edison Chan is head of legal and compliance at Sygnum Asia, where he oversees regulatory strategy and compliance across the firm's Asia-Pacific operations. Sygnum is a global digital asset banking group founded on Swiss and Singapore heritage, empowering professional and institutional investors, banks, corporates, and distributed ledger technology foundations to invest in digital assets with complete trust. In Switzerland, Sygnum holds a banking licence and has Capital Markets Services and Major Payment Institution licences in Singapore. The group is also regulated in Abu Dhabi and Luxembourg. </div>

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Edison Chan, head of legal and compliance at Sygnum Asia, discussed Hong Kong's recent virtual asset reforms, including the Stablecoins Ordinance and licensing frameworks for OTC dealers and custodians. These changes aim to create a comprehensive regulatory architecture, enhancing institutional trust in digital assets. The Stablecoins Ordinance establishes a licensing framework for stablecoin issuers, with strict requirements for reserve management and governance. The proposals for OTC dealers and custodians expand regulation beyond exchanges, ensuring high standards for virtual asset advisory and custody services, positioning Hong Kong as a global Web3 hub.

- Hong Kong has made significant strides in regulating virtual assets, establishing a comprehensive framework that includes the recently passed Stablecoins Ordinance and licensing for OTC dealers and custodians.  
- These reforms are aimed at fostering institutional trust and integrating digital assets into mainstream financial services, thereby addressing counterparty risks that have previously limited institutional participation.  
- As Hong Kong's regulatory landscape evolves, it is becoming increasingly attractive for institutional investors, bolstered by alignment between regulatory standards and market needs.

Edison Chan: «Regulation Unlocks Real Demand for Crypto»