February 11, 2026, Hong Kong Convention and Exhibition Centre, under the spotlight of the Consensus conference, Hong Kong Securities and Futures Commission CEO Julia Leung and Intermediaries Division Executive Director Ye Zhiheng took the stage one after another. The package of new regulations they announced cast a deep water bomb on the digital asset market—licensed virtual asset brokers can now provide financing services to securities margin clients, perpetual contracts receive their first regulatory framework, and platform affiliates are permitted to act as market makers.
This is the most significant regulatory move in the digital asset space since the SFC released the ASPIRe roadmap in February 2025. But beyond the surface of “Hong Kong finally loosening crypto leverage,” a more important question is: Why now? Why limited to Bitcoin and Ethereum as collateral? Why set the haircut rate at 60%?
Answering these questions points to a deeper proposition: Hong Kong’s SFC is treating the virtual asset market as a “testbed” for digital asset regulation, and what it ultimately aims to harvest in this field may be the scaled-up growth of real-world assets (RWA).
As a long-term observer of Hong Kong’s digital asset regulation, RWA Research Institute believes: Hong Kong is using the virtual asset market as a “stress test field” for digital asset regulation, and RWA will be the final “harvest” in this experimental plot. Analyzing each clause of the February 11 regulations now is akin to drawing a navigation chart for the next wave of RWA innovation.
When the tide truly arrives, those who can identify the course will be qualified to lead.
1. What has the new regulation changed: financing, perpetual contracts, and related-party market making
Understanding the February 11 regulation cannot stop at “approval.” A close reading of the full circular reveals that the SFC is not simply lifting bans but constructing a complete risk control loop for leverage in digital assets through three interconnected measures.
Financing: Anchored in the securities framework, collateral limited to two major coins
The most notable change is the abolition of the previous ban on “licensed entities not providing financing to clients for virtual assets.” According to the circular issued on February 11, virtual asset brokers engaged in securities financing can now offer virtual asset financing services to their securities margin clients.
But this “approval” is guarded by high walls.
According to reports from Daily Economic News, the new rules specify that only virtual asset brokers’ securities financing clients qualify for virtual asset financing, and brokers should not increase clients’ credit limits solely because they can provide such financing. This means that virtual asset leverage is not an independent credit expansion channel but an ancillary service layered on traditional securities margin accounts.
A more symbolic aspect is the collateral rules. The SFC adopts a very cautious stance: Qualified virtual asset collateral is limited to Bitcoin and Ethereum, and must be subjected to a minimum 60% prudential haircut rate. In a speech at Consensus, Julia Leung stated, “We will adopt standards as strict as those for securities financing in traditional finance, including prudent haircuts on securities and virtual assets.”
What does a 60% haircut imply? For example, if a client provides $100 worth of Bitcoin as collateral, the broker only recognizes $40 as the secured value. Compared to traditional securities financing, where blue-chip stocks are typically subjected to 30%-50% haircuts, this is more conservative. The SFC explained that virtual assets have performed poorly under systemic shocks—despite being the most active assets, they have experienced intraday and cross-day sharp declines, and leverage tools could exacerbate downward risks.
Furthermore, the new rules explicitly prohibit virtual asset brokers from re-pledging, reusing, or encumbering client collateral. This directly cuts off the common crypto finance chain of “re-hypothecation leverage stacking,” contrasting sharply with some Western jurisdictions’ regulations.
Perpetual contracts: Principles-based, transparency is paramount
The second measure is technically more sophisticated than financing. The SFC issued a high-level framework for virtual asset perpetual contracts, providing a compliant path for these dominant derivatives in crypto markets.
Key constraints include three aspects. First, issuance scope—perpetual contracts can only be sold to professional investors; retail clients are excluded. Second, reference assets—must be virtual assets already permitted for spot trading with retail clients or indices compliant with IOSCO’s financial benchmark principles. This excludes most long-tail altcoins. Third, margin—platforms are strictly prohibited from extending any form of credit for margin; margins must be paid in fiat, Hong Kong dollar-backed stablecoins, or tokenized deposits.
Notably, the framework requires platform operators to “be responsible for the settlement of all transactions on their platform,” whether or not they are the counterparties, and prescribes a clear loss-sharing mechanism. This essentially transplant traditional derivatives clearing functions—platforms are no longer just matching trades but also assuming central counterparty (CCP) clearing responsibilities.
Ye Zhiheng emphasized that this framework adopts a “principles-based” regulatory approach, requiring platforms to make transparent risk disclosures and establish internal risk management measures, including valuation, margin collection, liquidation, and insurance fund governance. This design preserves room for product innovation while ensuring investor protection.
Affiliate market making: liquidity injection and firewall to prevent conflicts of interest
The third measure appears technical but addresses the longstanding “liquidity cold start” problem faced by licensed virtual asset trading platforms. The new rules permit affiliates of licensed platforms to act as market makers, provided strong safeguards are in place to reduce conflicts of interest.
Ye Zhiheng explained these safeguards: including strict conflict monitoring, data security, information segregation, and operational independence. He stressed that this move helps narrow bid-ask spreads, improve fairness and transparency, ensure client instructions are prioritized, and effectively identify market manipulation.
Viewing these three measures together reveals a clear regulatory logic: the SFC is building a “three-dimensional” control system for leverage trading in digital assets—categorizing assets, layering risks, and dividing responsibilities. Collateral is limited to the two most liquid and largest market cap assets; derivatives are restricted to professional investors; market making is limited to affiliates but with a firewall. This is not a blanket market relaxation but a carefully designed stress test.
2. A step-by-step regulatory evolution: Why now, and why these clauses?
To understand the true intent behind the February 11 regulations, they must be viewed within the evolution of the SFC’s ASPIRe roadmap.
In February 2025, the SFC released the ASPIRe roadmap, clearly aiming to diversify products and services and enhance market liquidity. Today, Ye Zhiheng described the development stage as a “critical phase,” updating the progress of the three pillars of the roadmap.
On Pillar A (Access), the SFC has completed consultation on proposed regulation of virtual asset trading and custody, and is accelerating legislation and licensing assessments. On Pillar P (Products), the financing and perpetual contract frameworks are being implemented. On Pillar R (Relationships), the SFC plans to launch a Digital Asset Accelerator to provide clear guidance for market builders, explore new market maker models, financing mechanisms, and leverage products.
Ye Zhiheng summarized: “Liquidity is not endogenous; it must be cultivated in an open market environment, under sound governance, and with clear regulatory objectives.”
This reveals the core methodology of Hong Kong regulators: liquidity is “designed,” not left to chance. The February 11 regulations are a product of this engineering—using carefully crafted incentives and risk constraints to guide market participants within controllable boundaries.
From this perspective, many clauses become clearer.
Why limit collateral to Bitcoin and Ethereum? Because they are currently the only virtual assets with sufficient market depth and proven price discovery over a long period. The circular states that limiting collateral to these assets is a “prudent stance in response to the development of virtual asset markets and financing,” and the SFC reserves the right to adjust haircuts after prior notice. This is a typical “learning regulator” approach—starting with small, high-safety-margin pilots, accumulating data, then gradually expanding.
Why only professional investors for perpetual contracts? Because derivatives leverage involves risks and reward profiles far beyond retail investors’ understanding. The funding rate mechanisms, mark price calculations, and liquidation thresholds create complex risk transmission chains. According to PANews analysis, high-leverage positions often trigger liquidations within narrow price ranges—e.g., a 100x leveraged position has only about 0.5% price movement space before liquidation. Isolating such products to professional investors aligns with international standards and Hong Kong’s framework.
Why allow related-party market making with a firewall? Because the spot liquidity in virtual assets is still insufficient to attract independent third-party market makers at scale. According to Odaily’s January 2026 report, tokenized gold PAXG on Binance has less than $3 million in depth on both sides; a $4 million trade can cause a 1.5% slippage, while gold futures on CME have negligible slippage at similar volumes. Under such conditions, involving affiliates as market makers is a practical solution, but must be tightly controlled for conflicts.
Some compliance professionals have expressed cautious skepticism. A Hong Kong law firm partner, on condition of anonymity, pointed out that the high volatility of virtual assets means applying traditional securities margin rules may underestimate tail risks. For example, in October 2025, PAXG on Binance experienced two abnormal swings—down 10.6% and up 9.7% within a week—likely not due to fundamentals but order book fragility. If such volatility occurs in leveraged trading, it could trigger a cascade of liquidations.
The SFC does not deny these risks. The circular explicitly warns that “virtual assets have performed poorly under systemic shocks,” and requires brokers to continuously monitor their margin loan portfolios for vulnerable assets, maintaining real-time awareness of collateral fluctuations and readiness to act. This preemptive risk disclosure reflects a pragmatic attitude: leverage cannot be risk-free; regulation’s role is to ensure risks are fully identified, priced, and isolated.
3. RWA liquidity dilemma: Why do we need these “leverage tools”?
At this point, a key question emerges: why does RWA Research Institute spend so much effort dissecting a policy aimed at virtual assets?
The answer: the liquidity crisis in the RWA market is more severe than in virtual assets; and the lack of leverage tools is a core part of this crisis.
In January 2026, Odaily published an in-depth report titled “When Big Funds Get Serious, RWA Liquidity Issues Surface,” revealing data on tokenized assets’ liquidity.
In tokenized gold markets, PAXG and XAUT face severe liquidity constraints on centralized exchanges. At a nominal trading volume of $4 million, perpetual contract slippage approaches 150 basis points; in CME gold futures, similar volume results in negligible slippage, with a $20 million impact causing less than 3 basis points.
In tokenized stocks, the situation is even more dire. TSLAx and NVDAx are among the largest tokenized stocks by market cap. On Jupiter, a $100,000 TSLAx trade causes about 5% slippage; NVDAx’s slippage reaches 80%, nearly untradeable. In contrast, trading the same size of Tesla or Nvidia stock on NASDAQ results in price impacts of 18 and 14 basis points, respectively—without considering dark pools and OTC channels.
In AMM DEXs, liquidity is even worse. In February 2025, a $2,912 USDT trade in XAUT on Uniswap resulted in a valuation of only about $1,731, with a 68% premium paid. Over the past half-year, average slippage for XAUT and PAXG on Uniswap has been between 25 and 35 basis points, sometimes exceeding 50.
More alarmingly, low liquidity can propagate systemic risks. In mid-October 2025, PAXG on Binance experienced abnormal swings, which, due to Binance’s dominant position in Hyperliquid’s oracle system, led to liquidations of $6.84 million long and $2.37 million short positions on Hyperliquid—exceeding Binance’s own liquidation volume. This shows that insufficient liquidity in one market can amplify and spread volatility across multiple venues.
Odaily attributes liquidity shortages to structural issues: market makers need to complete asset minting, which involves operational coordination, KYC, custody, and settlement—requiring upfront capital and hours or days of delay; redemptions take T+1 to T+5, with daily or weekly limits. From a market maker’s perspective, such assets are effectively “low liquidity,” with capital efficiency far below that of traditional crypto derivatives.
In such a market structure, introducing leverage tools could be the key to breaking the liquidity deadlock. Leverage trading demands high-frequency price discovery and real-time risk management, which would incentivize deeper market quoting, narrow spreads, and thicker order books. A sufficiently deep spot market would also make tokenized assets reliable collateral, unlocking their full financial utility.
This is the core insight of the Hong Kong SFC’s February 11 regulations for the RWA space. While virtual assets and RWAs differ fundamentally, they face the same regulatory challenge: how to establish compliant leverage channels for digital-native assets under controlled risk conditions.
4. “Bridging the gap” for RWA: The four symbolic lessons of the new regulation
Viewing the February 11 regulation through the lens of RWA reveals four progressive lessons.
First layer: Collateral framework—setting the “pass mark” for RWA leverage
The collateral treatment in the new rules offers a direct reference for future RWA financing. Limiting qualified collateral to two major coins sends a clear signal: regulators will not treat all digital assets equally but will tier assets based on market cap, liquidity, and stability.
In RWA, this implies that collateral value will vary significantly across asset classes. US government bonds tokenized by firms like BlackRock or Franklin Templeton have stable cash flows and low credit risk but less secondary market depth than Bitcoin; tokenized real estate or private credit face more non-standard issues and longer liquidation times. It’s reasonable to expect that Hong Kong’s RWA haircut rates will start at around 60% and adjust based on asset liquidity ratings.
Second layer: Perpetual contract framework—“transparency” template for RWA derivatives
The high-level framework for perpetual contracts essentially transposes traditional derivatives regulation principles into the digital asset domain. Requirements for “transparent product design, clear disclosures, and sound operational controls” are standard in global derivatives regulation.
This provides a valuable reference for RWA derivatives. For example, if a licensed platform offers a forward contract on tokenized green bonds, it must answer: Is the valuation model transparent? Are margin standards dynamically reflecting volatility? How to prevent manipulation of trigger prices? Is the loss-sharing mechanism fair and transparent? The February 11 regulation lists the questions that need answers—serving as a pre-approval checklist for compliant product design.
Third layer: Related-party market making—“Chinese wall” model for RWA liquidity
The regulation’s allowance for affiliates to act as market makers, with safeguards, offers a model for solving liquidity issues in RWA markets.
RWA markets face the classic “chicken-and-egg” problem: low liquidity discourages participation, but low participation discourages liquidity providers. Introducing related-party market making can break this cycle, but conflicts of interest are a major obstacle—affiliates might exploit information advantages or manipulate prices.
Hong Kong’s solution is a formal firewall—not just organizational separation. Measures include prioritizing client instructions, effective detection of market making activities, independence of functions, and information segregation. This provides a replicable, compliant architecture for RWA platforms involving affiliates. The core idea: related-party market making is not inherently problematic; unregulated conflicts are.
Fourth layer: Digital Asset Accelerator—regulatory “dialogue” mechanism
Ye Zhiheng announced the Digital Asset Accelerator at Consensus, which could be the most valuable long-term initiative.
The accelerator is envisioned as a communication channel between regulators and industry innovators, providing clear guidance, supporting innovation, and helping regulators and market participants allocate resources efficiently. It aims to explore new market maker models, financing mechanisms, and leverage products.
This marks a significant evolution in Hong Kong’s regulatory approach: shifting from “rule-maker and rule-follower” to “regulator-market” collaborative governance. For RWA projects, the accelerator offers a formalized window—when designing new products, project teams no longer need informal channels but can seek clear regulatory guidance directly.
This is especially critical for RWA innovations in the “regulatory gray area.” For example, tokenized private credit involves non-standard assets, infrequent valuation, and transfer restrictions—features that differ markedly from standard securities. Relying solely on existing rules often leads to mismatches. The accelerator can help co-develop tailored regulatory pathways.
5. Leverage as a ruler: Hong Kong’s ambition measured
Returning to the core of the February 11 regulation.
Ye Zhiheng’s closing remark at Consensus: “Liquidity is not endogenous; it must be cultivated in an open market environment, under sound governance, and with clear regulatory objectives.”
This statement warrants repeated reflection. It shows that Hong Kong regulators are not “relaxing” but “designing” liquidity. The 60% haircut is not distrust but objective risk pricing; the perpetual contract framework is not stifling innovation but establishing safe boundaries; the firewall for related-party market making is not excluding liquidity but ensuring it flows within supervised channels.
This methodology offers profound insights for RWA markets. The scale-up of RWA is not just a technical or legal issue but an institutional engineering problem. Tokenization can be instant, but liquidity takes years to develop; smart contracts can automate settlement, but risk pricing requires ongoing market participation; regulatory frameworks can be issued overnight, but regulatory capacity builds through iterative learning.
Hong Kong’s ASPIRe roadmap and February 11 regulations exemplify this institutional engineering. They did not choose a “one-size-fits-all” ban nor an “laissez-faire” approach but a more challenging path: treating high-volatility virtual assets as a regulatory learning laboratory, gradually accumulating experience and capabilities, then applying these mature methodologies to the broader RWA field.
For RWA practitioners, this means two things:
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First, the window for compliant leverage is opening, but the threshold is higher than expected. The 60% haircut, transparency obligations, and conflict-of-interest firewalls—these regulatory tools refined in virtual assets will be replicated in RWA markets. Projects attempting regulatory arbitrage under the guise of “decentralization” will find it difficult to enter Hong Kong’s licensed ecosystem.
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Second, now is the golden opportunity to learn these regulatory tools. As virtual asset data accumulates, compliant perpetual products operate smoothly, and the Digital Asset Accelerator becomes routine, Hong Kong regulators will be equipped to transfer this methodology to RWA. Those who can promptly deliver compliant leverage solutions, market maker systems, and risk disclosures will gain a first-mover advantage in shaping the market.
On February 11, 2026, this small step by the Hong Kong SFC may be reevaluated as a milestone in the future. When global financial centers remain cautious about crypto leverage, Hong Kong chose a middle path: not banning leverage outright, but imposing “transparency” and “firewalls” on leverage.
This “firewall” will also be applied to RWA products in the future.
Author: Liang Yu Editor: Zhao Yidan
