Hong Kong to allow crypto exchanges to access global liquidity pools
Quick Take
- The Hong Kong Securities and Futures Commission will allow local crypto exchanges to share global order books with their overseas trading platforms.
- That represents a shift from the region’s current model, where orders are pre-funded and settled within its borders.
Hong Kong's top financial regulator will allow local crypto trading platforms to connect with global liquidity through shared order books, as the city pushes to become a crypto hub.
The Hong Kong Securities and Futures Commission (SFC) released two circulars on Monday aimed at enhancing liquidity and expanding product offerings for local crypto exchanges.
SFC-licensed crypto exchanges in Hong Kong will be able to share a global order book with their overseas trading platforms, according to the circular. However, local crypto platforms intending to do so must first obtain prior written approval from the SFC.
"[This] integration will enable local investors to tap global market liquidity efficiently with better price discovery and more competitive prices," said SFC Chief Executive Officer Julia Leung in a Hong Kong Fintech Week speech synopsis published by the agency.
That represents a shift from the region's current model, where orders are pre-funded and settled within its borders.
A separate circular from the SFC on Monday exempted tokens and stablecoins licensed by the Hong Kong Monetary Authority from the mandatory 12-month trading history required for offering to professional investors.
Reevaluating rules
These relaxations came as Hong Kong continues to evaluate its regulations amid intensifying global competition especially after pro-crypto U.S. President Donald Trump took office in January. The region has embraced the crypto industry with licensing frameworks in place for crypto exchanges and stablecoin issuers.
The SFC said Leung "examined the city's upcoming initiatives" aimed at "building a trusted, globally competitive and sustainable ecosystem."
"[Overly] strict requirements risk driving liquidity and talents to lighter-touch jurisdictions, but too little oversight could undermine trust and stability," Leung said in the speech synopsis.
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