The SFC reissued its circular on authorised funds with more than 10% of net asset value in crypto assets, replacing the April 2025 version. The revision takes stablecoins from HKMA-licensed issuers and tokenised deposits out of scope. The circular keeps the existing rules on eligible tokens, custody, valuation and staking.
Why it matters: A fund holding licensed stablecoins or tokenised deposits is no longer a crypto fund in Hong Kong, which clears the path for tokenised cash products.
For Ethereum: Authorised crypto funds may stake, through licensed platforms or banks, with prior SFC approval.
The circular applies to funds seeking authorisation for public offer with crypto exposure above 10% of net asset value (para 1). The circular marks several paragraphs as amended. The substantive change is paragraph 2: the requirements no longer apply to exposure to stablecoins issued under an HKMA licence or to tokenised deposits. Those holdings are now covered in the FAQs on the Code on Unit Trusts and Mutual Funds.
The rest of the framework stands:
Funds may only hold, directly or indirectly, tokens that the Hong Kong public can trade on licensed platforms (para 11).
No leverage at fund level (para 15).
Spot trades and in-kind subscriptions go through licensed platforms or banks (para 17).
Custody sits with licensed platforms or banks meeting HKMA standards, with most holdings in cold storage and keys held in Hong Kong (paras 20 to 21).
Funds may stake and carry out other crypto activities through licensed platforms or banks, subject to disclosure and reporting of the amounts committed and the revenue earned (para 28), with prior SFC approval (para 31).
Implications
The carve-out solves a classification problem. A money market fund that holds tokenised deposits, or settles in a licensed stablecoin, would otherwise have counted as a crypto fund once those holdings passed 10%, with all the custody and eligibility rules that follow. Now it does not.
For crypto funds, the circular consolidates rather than loosens. The eligibility rule ties fund holdings to what licensed platforms list for retail, which keeps authorised funds to a short list of large tokens.
For Ethereum
Hong Kong has listed spot ether exchange-traded funds since 2024, and this circular keeps the route for them to stake. Staking goes through licensed platforms or banks rather than directly with validators, and needs prior approval, disclosure of the amount staked and reporting of the revenue earned. That keeps Hong Kong’s ether funds able to earn staking yield inside the regulated perimeter.
What to watch
The CUT Code FAQ on stablecoin and tokenised deposit holdings, which now sets the rules for those assets, and further staking approvals for Hong Kong’s ether funds.