SFC sets expected standards for VATPs and licensed corporations on Relevant Stablecoin services
VATPs and licensed corporations must adopt revised licensing conditions and update disclosures, client classification, and SFC-notification workflows before conducting Relevant Stablecoin activities
SFC
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Change
On 27 May 2026, the SFC issued a circular setting expected standards for licensed virtual asset trading platforms (VATPs) and licensed corporations conducting activities in Relevant Stablecoins — stablecoins that qualify as 'specified stablecoins' under the Stablecoins Ordinance (Cap. 656) and are issued by an HKMA-licensed issuer. The circular relaxes certain virtual-asset requirements for Relevant Stablecoins, imposes new disclosure and advance-notification obligations, and applies revised licensing conditions to VATPs and licensed corporations.
Why it matters
The circular clarifies that, because Relevant Stablecoins are under HKMA oversight (reserve backing and redemption), several VA requirements need not apply: liquidity and index requirements, VA-knowledge assessment for Relevant Stablecoin-only clients, and inclusion of Relevant Stablecoin holdings in client exposure limits. In their place sit new affirmative obligations: clients must receive material disclosure on the stablecoin's stabilisation mechanism and redemption arrangements; suitability requirements continue to apply on any solicitation or recommendation; and VATPs and licensed corporations must give the SFC advance written notice before admitting, suspending or removing any Relevant Stablecoin (replacing the prior-approval step). For licensed corporations, the circular opens new structural arrangements — partnering directly with HKMA-licensed stablecoin issuers, dealing through omnibus accounts with professional-investor-only (PIO) VATPs to serve retail clients (paragraph 20(a)(iii) of the Joint Circular is removed), and using the licensed issuer's segregated custody accounts. Revised licensing conditions apply to VATPs (Appendix 1) and to licensed corporations (Appendices A1/A2, tracked changes B1/B2). The relief is bounded: it applies only to Relevant Stablecoins, not to other stablecoins, so correct product and client classification is the precondition for relying on any of the relaxations. A companion HKMA circular issued the same day covers the licensed-issuer/banking channel.
Implications
- — VATPs and licensed corporations must adopt the revised licensing conditions (Appendix 1 for VATPs; Appendices A1/A2 for licensed corporations) and review and update their internal policies, procedures, and disclosures before conducting Relevant Stablecoin activities — operating under the prior conditions or without the required disclosures is non-compliant.
- — Compliance teams must implement the Relevant Stablecoin disclosure requirement — clients must receive material information on the stablecoin's stabilisation mechanism and redemption arrangements; omitting this is a disclosure breach even though liquidity, index, and exposure-limit requirements are relaxed for these tokens.
- — VATPs and licensed corporations must establish an advance written-notification process to the SFC for any plan to admit, suspend, or remove a Relevant Stablecoin for client trading — prior SFC approval is no longer required, but the advance-notification obligation is mandatory and replaces it.
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