SFC revises authorised VA fund circular to permit direct spot virtual-asset investment and staking
Management companies, custodians, and participating dealers of SFC-authorised VA funds must meet revised eligibility, custody, valuation, and disclosure requirements, and obtain prior SFC consultation and approval before exceeding 10% VA exposure or engaging in staking
Change
On 27 May 2026, the SFC issued a revised circular (superseding the 7 April 2025 version) setting the requirements for authorising investment funds with virtual-asset exposure above 10% of NAV for public offering in Hong Kong. It permits SFC-authorised funds to invest directly in spot VA tokens accessible on SFC-licensed VATPs and, under the SFC's ASPIRe roadmap, opens the door to staking and other VA-related activities — both gated by eligibility, custody, valuation, disclosure, and prior-approval conditions.
Why it matters
The revised circular replaces the 7 April 2025 framework and broadens what SFC-authorised funds may do: direct spot VA investment (previously the regime centred on futures-based and indirect exposure) and, newly, staking and other VA-related activities under the ASPIRe roadmap. Both are conditional. Eligible VA is limited to tokens accessible to the Hong Kong public on SFC-licensed VATPs; futures are allowed only on conventional regulated exchanges; fund-level leverage is prohibited. Spot VA transactions must run through SFC-licensed VATPs or HKMA-compliant AIs, with participating dealers required to be SFC-licensed corporations or registered institutions. Custody is tightly specified — delegation only to SFC-licensed VATPs, HKMA-standard AIs, or SFC-acceptable entities; asset segregation; predominant cold-wallet storage; and seeds/private keys stored securely in Hong Kong with multi-signature and key-sharding. Valuation must follow an index-based approach. KFS and offering documents must carry upfront risk disclosure (price, custody, cybersecurity, fork risk for spot; roll cost and operational risk for futures). The staking framework imposes its own controls, disclosure, investor-notice, and reporting obligations. Across all three triggers — seeking authorisation above 10% NAV exposure, an existing authorised fund crossing 10%, or an authorised VA fund entering staking — prior SFC consultation and approval are mandatory. Relevant Stablecoins and tokenised deposits are carved out to the UT Code FAQs, and UCITS/MRF schemes are exempt except for the prior-approval requirement.
Implications
- — Management companies of SFC-authorised VA funds must meet the eligibility bar — a good regulatory-compliance track record and at least one competent staff member experienced in VA management — and accept additional terms and conditions imposed by the SFC's Intermediaries Division before authorisation; funds without the requisite staffing and track record cannot be authorised.
- — Fund management companies must obtain prior SFC consultation and approval before seeking authorisation for more than 10% NAV VA exposure, before an existing authorised fund obtains more than 10% VA exposure, or before an authorised VA fund engages in staking or other VA-related activities — proceeding without prior consultation and approval is non-compliant.
- — Trustees and custodians of SFC-authorised VA funds must restrict VA custody delegation to SFC-licensed VATPs, HKMA-standard AIs, or other SFC-acceptable entities, and enforce the custody controls — asset segregation, predominant cold-wallet storage, minimised hot-wallet exposure, and seeds/private keys stored securely in Hong Kong with multi-signature and key-sharding and backups; non-conforming custody arrangements disqualify the fund.
- — Management companies adopting spot-VA strategies must route all spot VA transactions through SFC-licensed VATPs or HKMA-compliant AIs (on- or off-platform), ensure participating dealers are SFC-licensed corporations or registered institutions under additional SFC terms, apply index-based valuation referencing major-platform trade volume, restrict futures to conventional regulated exchanges, and hold no leveraged exposure at fund level — dealing outside licensed venues, fund-level leverage, or non-index valuation is non-compliant.
- — Management companies engaging or planning to engage in staking or other VA-related activities must implement the ASPIRe guiding principles — strategy consistency, risk and conflict controls, counterparty due diligence and ongoing monitoring, KFS disclosure of committed VA amounts and associated risks, prior investor notice for material changes to objective, strategy, or risk profile (with assessment of shareholder approval and constitutive-document amendments), and interim/annual reporting of VA committed per activity as a proportion of NAV plus revenue and expenses — engaging without these controls and disclosures is a breach.
- — Compliance and product teams must update offering documents and product key facts statements (KFS) to carry upfront disclosure of investment limits and the specified key risks (price, custody, cybersecurity, and fork risk for spot VA; roll cost, margin, and operational risk for futures) and complete investor education before launch — launching without the prescribed disclosures is non-compliant.
Who is affected
- — Asset and fund management companies operating or seeking SFC-authorised VA funds in Hong Kong
- — Fund trustees and custodians taking custody of fund VA holdings
- — Participating dealers (PDs) for SFC-authorised spot VA ETFs
- — Fund administrators, market makers, and index providers serving VA funds
- — Compliance and product teams at fund management companies
- — SFC-licensed VATPs and authorised financial institutions providing execution and custody to these funds
What to watch
- — First SFC approvals of staking and other VA-related activities under the ASPIRe roadmap — the initial authorisations will set the operative precedent for permitted activities and their conditions
- — The UT Code FAQs (questions 20F on staking, 20G on Relevant Stablecoins and tokenised deposits) where the detailed requirements sit, distinct from the circular
- — Expansion of the eligible-VA universe as additional tokens become accessible to the Hong Kong public on SFC-licensed VATPs
- — Whether the SFC introduces further requirements or conditions — the circular expressly reserves this discretion