Ethereum News Today: Hong Kong’s Crypto Future Hangs on Regulator Speed and Scope

Hong Kong is being urged to expand its range of available cryptocurrencies to strengthen its position as a leading global crypto hub, according to insights from industry leaders and recent regulatory developments. Changpeng “CZ” Zhao, the founder of Binance, emphasized that the city has the potential to rival markets like the United States and the United Arab Emirates, provided its regulators move swiftly to implement favorable policies. In an interview with the South China Morning Post, Zhao noted that the Hong Kong government has shown a clear commitment to embracing Web3 technologies and has the ability to adapt quickly to changing market demands [4].

Currently, Hong Kong’s retail traders are limited to trading only four cryptocurrencies—Bitcoin, Ether, Avalanche, and Chainlink—on licensed exchanges. This restriction was introduced by the Securities and Futures Commission (SFC) in August 2023, as part of its broader effort to regulate and manage the risks associated with digital assets. Tokens must be included in at least two major investible indices, with one from a traditional finance-based provider, to be eligible for listing [5]. Zhao criticized this limitation as insufficient, arguing that it restricts market participation and innovation. He proposed a model akin to Japan’s, where exchanges have more autonomy in determining which cryptocurrencies to list [4].

The city’s ambition to expand its crypto market is reflected in its recent regulatory actions. In August 2025, Hong Kong enforced its Stablecoin Ordinance, setting licensing requirements for stablecoin issuers and aligning with global trends in digital asset regulation. The ordinance is seen as a step toward creating a structured and trustworthy environment for stablecoin operations, which have gained traction over Central Bank Digital Currencies (CBDCs) globally [1]. Industry leaders, including JD.com CEO Richard Liu, have highlighted the potential of stablecoins to reduce cross-border payment costs and improve transaction efficiency, reinforcing the need for a supportive regulatory framework [3].

Hong Kong’s push for digital finance also includes a focus on real-world asset (RWA) tokenization. Tokenizing tangible assets such as real estate, infrastructure, and bonds is seen as a way to enhance liquidity and broaden investment opportunities. However, the process is currently hindered by high costs and compliance challenges. According to reports, issuing a single RWA tokenized product can exceed RMB 6 million ($820,000), primarily due to brokerage fees, blockchain integration, and legal expenses [3]. Despite these obstacles, proponents argue that tokenization can streamline traditional securitization processes and open new avenues for global liquidity [3].

To further bolster its position, Hong Kong has launched six virtual asset ETFs, with Ethereum-based products attracting the most trading activity. On August 26, Ethereum ETFs accounted for nearly two-thirds of the total turnover in the city’s digital asset market [3]. This trend mirrors global investor preferences, where Ethereum’s role in decentralized applications and yield generation extends beyond mere price speculation. The growing appetite for digital assets is also reflected in corporate strategies, such as Ruihe Data Technology Holdings’ move into Bitcoin mining via a cloud mining partnership with Bitmain. The company aims to leverage digital assets and emerging technologies to diversify its business and generate new revenue streams [3].

While Hong Kong’s digital finance landscape is evolving, the city still faces challenges in balancing innovation with risk management. Regulators are preparing to release a more detailed policy framework by year-end, which will build on its initial 2022 virtual asset policy and further clarify the rules governing digital asset trading and issuance. This effort aligns with global trends, where jurisdictions like the UAE, Singapore, and Switzerland have created favorable environments by offering low or zero capital gains taxes on crypto, robust legal frameworks, and a focus on innovation [2]. Hong Kong’s ability to compete with these hubs will depend on its capacity to adapt rapidly to market dynamics and provide a regulatory environment that supports both institutional and retail participation [1].

Source: [1] title1 (https://coincentral.com/cz-declares-cbdcs-outdated-as-stablecoins-dominate-global-focus/) [2] title2 (https://cointelegraph.com/magazine/the-one-thing-these-6-global-crypto-hubs-all-have-in-common/) [3] title3 (https://www.mitrade.com/insights/news/live-news/article-3-1070793-20250827) [4] title4 (https://www.scmp.com/tech/blockchain/article/3323465/binance-founder-cz-hong-kong-can-rival-us-crypto-hub-its-future-hinges-speed) [5] title5 (https://cryptonews.com/news/hong-kong-needs-broader-crypto-offerings-rival-us-uae-changpeng-zhao/)