Hong Kong Securities and Futures Commission Leung Fung-yee: Hong Kong is currently finalizing plans for a regulatory system for digital asset trading and custody services.

Hong Kong Securities and Futures Commission (SFC) CEO Leung Fung-yee stated at a forum that Hong Kong is committed to building a safe and reliable digital asset platform. The authorities are finalizing regulations on digital asset trading and custody services, which will be the last two pieces of the puzzle in establishing a robust digital asset ecosystem. She pointed out that the adoption of tokenized financial products in Hong Kong is increasing, such as green bonds, currency market funds approved by the SFC, and retail gold products. The market size of related tokenized products in Hong Kong is approximately USD 3 billion. Most tokenization pilot projects are still in the early stages with room for improvement. Some projects have improved efficiency and reduced costs in clearance and settlement, but many products still rely on fiat currency for cash settlement. She also mentioned that no one can predict the future of tokenization or stablecoins in cross-border supply chain payments but emphasized that Hong Kong will adhere to investor protection, robust financial infrastructure, and sound regulation in digital asset development. Leung Fung-yee pointed out that more market participants are holding a long-term vision and hoping to complete the entire lifecycle of traditional financial products on blockchain for instant settlement and finality. Under the guidance of the SFC and the HKMA, financial institutions are conducting real-time transactions in the sandbox phase of the Ensemble project. Investors can transfer tokenized deposits across banks to subscribe to tokenized products. To achieve scalable development, interoperability is a key step, requiring the establishment of a shared blockchain layer for interbank payments gradually integrating with the overall financial market. Leung Fung-yee also mentioned her views on the private credit market, stating that with the implementation of Basel III, there have been significant changes in the financial landscape compared to the 2008 financial crisis. The increase in capital and liquidity requirements for banks has led to the rise of private credit. She noted that over the past ten years, the global assets under management of private capital have grown several times to USD 14 trillion, with leverage shifting from banks to non-bank institutions. The recent collapses of U.S. auto parts supplier First Brands and auto subprime lender Tricolor have raised alarms about private credit risk. The increased participation of retail investors has prompted regulatory agencies to urgently examine the ecosystem of private credit and its connection to the financial system. The SFC has strengthened its supervision of the Hong Kong over-the-counter derivatives market, requiring declaration of delta positions for OTC trades from September onwards.