On February 11, 2026, at the Hong Kong Convention and Exhibition Centre, under the spotlight of the Consensus conference, the Chief Executive of the Hong Kong Securities and Futures Commission (SFC), Ashley Alder, and the Executive Director of the Intermediaries Division, Kingston Lai, took the stage successively. They announced a package of new regulations that dropped a deep-sea bombshell in the digital asset market—licensed virtual asset brokers are now allowed to provide financing services to securities margin customers, a regulatory framework for perpetual contracts was established for the first time, and platform affiliates were permitted to act as market makers.
This is the most significant institutional advancement in the digital asset field by the SFC since the release of the ASPIRe roadmap in February 2025. However, beyond the surface of "Hong Kong has finally loosened crypto leverage," deeper questions arise: Why now? Why are the collateral limits restricted to Bitcoin and Ethereum? Why is the haircut rate set at 60%?
The answers to these questions will point to a deeper proposition: the SFC is treating the virtual asset market as a "testbed" for digital asset regulation, aiming for a potential spring of large-scale real-world assets (RWA) harvest in this field.
As a research organization that has been tracking Hong Kong's digital asset regulation for a long time, the RWA Research Institute believes: Hong Kong is treating the virtual asset market as a "stress test" for digital asset regulation, and RWA will be the ultimate harvest from this testbed. Dissecting the details of every clause of the new regulation as of February 11 is essentially drawing a nautical chart for the next wave of RWA innovation.
When the tide truly comes in, only those who can identify the channels will qualify to be the navigators.
1. What the New Regulations Changed: Margin Financing, Perpetual Contracts, and Affiliate Market Making
Understanding the new regulations as of February 11 cannot stop at the word "release." A close reading of the full circular will reveal that the SFC did not simply lift the ban but established a complete digital asset leverage risk control closed loop through three interlocking measures.
Margin Financing: Anchoring to Securities Framework, Collateral Limited to Two Major Currencies
The most noteworthy change in the new regulations is the abolition of the previous prohibition on "licensed corporations providing financial accommodation for clients to purchase virtual assets." According to the circular released by the SFC on February 11, virtual asset brokers engaged in securities margin financing can now offer virtual asset financing services to their securities margin customers.
However, this "release" has been set with extremely high barriers.
According to reports by Daily Economic News journalist Li Xukui on-site, the new regulations specify that only the securities margin clients of virtual asset brokers are eligible for virtual asset financing, and brokers should not raise customers' credit limits solely due to the provision of such financing. This means that virtual asset leverage is not an independent credit expansion channel but an added service tied to traditional securities margin accounts.
More significant is the collateral rule. The SFC has taken an extremely cautious stance, stating that qualified virtual asset collateral is limited to Bitcoin and Ethereum, and a minimum prudential haircut rate of 60% must be applied. Caixin quoted Ashley Alder at the Consensus conference, stating, "The standards will be as strict as those for margin financing in traditional finance, including applying prudent haircut rates to both securities and virtual assets."
What does a 60% haircut rate mean? If a client provides collateral worth $100 in Bitcoin, the broker only recognizes $40 as the guarantee value. This shows a more conservative stance compared to the typical haircut rates of 30%-50% for blue-chip stocks in traditional securities financing. The SFC explained that virtual assets have underperformed during significant systemic shocks, and even the most active assets have experienced sharp intraday and overnight declines, with the potential down risk aggravated as leverage tools increase.
Additionally, the new regulations explicitly prohibit virtual asset brokers from re-pledging, re-using, or encumbering clients' collateral. This provision directly cuts off the common "re-pledge leverage stacking" chain in the crypto finance market, in sharp contrast to certain regulatory jurisdictions in Europe and the United States.
Perpetual Contract Framework: Principles Above All, Transparent Disclosure Takes Precedence
The technical content of the second measure is far superior to margin financing. The SFC has published, for the first time, a "High-Level Framework for Virtual Asset Trading Platforms to Provide Virtual Asset Perpetual Contracts," providing a compliant pathway for this type of derivative that dominates the crypto market.
The key constraints of the framework include three aspects. First, issuance target restrictions—perpetual contracts can only be sold to professional investors, with retail customers excluded. Second, reference asset scope—it must be a virtual asset that has been approved for spot trading to retail customers or an index that complies with the International Organization of Securities Commissions (IOSCO) financial benchmark principles. This means that the vast majority of long-tail altcoins are excluded. Third, type of margin—platforms are strictly prohibited from providing any type of credit for margin, which must be paid in fiat currency, stablecoins regulated by the Hong Kong Monetary Authority, or tokenized deposits.
Notably, the framework requires platform operators to "be responsible for the settlement of all transactions on their platform, regardless of whether they are a party to such transactions," and prescribes a clear loss sharing mechanism. This is essentially a system transplant of the traditional derivative settlement function—platforms are no longer just transaction facilitators but take on the clearing responsibilities of a central counterparty (CCP).
Dr. Kingston Lai emphasized when explaining this framework that it adopts a "principles-based" regulatory model, requiring platforms to make transparent risk disclosures and establish robust internal risk management measures, including measures related to valuation, margin collection, liquidation mechanisms, and insurance fund governance. This design retains product innovation space for the platforms while ensuring effective investor protection.
Affiliate Market Making: Introducing Liquidity and a Conflict of Interest Firewall
The third measure appears to be a technical adjustment but effectively addresses the long-standing "liquidity cold start" problem faced by licensed virtual asset trading platforms. The new regulations allow affiliate companies of licensed platforms to act as market makers, provided that strong measures are in place to minimize conflicts of interest.
Kingston Lai elaborated on the content of these protective measures at the Consensus conference, including strict conflict of interest monitoring, data security, information segregation systems, and functional independence requirements. He emphasized that this move not only helps to narrow bid-ask spreads but also enhances fairness and transparency, while ensuring that client instructions receive priority and effectively identifying market-making activities.
When examining these three measures together, a clear regulatory logic emerges: the SFC is establishing a "classification of assets, risk stratification, and responsibility delineation" three-dimensional control system for digital asset leveraged trading. Collateral is limited to the two assets with the largest market value and deepest liquidity; derivatives are restricted to professional investors; and market-making functionality is confined to affiliates but reinforced with firewalls. This is not indiscriminate market loosening, but rather a meticulously designed risk stress test.
2. Step-by-Step Regulatory Evolution: Why Now and Why These Terms?
To understand the true intent of the February 11 regulations, it is essential to place them within the evolutionary context of the SFC's ASPIRe roadmap.
In February 2025, the SFC released the ASPIRe roadmap, clearly stating strategic goals such as expanding product and service diversity and enhancing market liquidity. A year later, at the Consensus conference, Kingston Lai updated the judgment about the developmental phase to "critical phase" and disclosed the latest progress of the roadmap's three pillars.
At the pillar A (Access) level, the SFC has completed the consultation summary on proposing regulations for virtual asset trading and custodial services, is rapidly advancing the legislative process, and accelerating license assessment progress. At the pillar P (Products) level, margin financing and the perpetual contract framework have been implemented. At the pillar Re (Relationships) level, the SFC will launch a Digital Asset Accelerator to provide clear guidance for market builders, exploring new market maker models, financing mechanisms, and leveraged products.
Kingston Lai’s summary is highly informative: "Liquidity is not intrinsic but must be cultivated in an open market environment, a sound governance framework, and clear regulatory design."
This statement reveals the core methodology of Hong Kong's regulatory agencies: liquidity is "designed," not left to chance. The February 11 regulations are the product of this regulatory engineering—through carefully crafted incentive mechanisms and risk constraints, guiding market participants to create depth within controllable boundaries.
From this perspective, many clauses of the new regulations will no longer be perplexing.
Why is collateral limited to Bitcoin and Ethereum? Because they are currently the only virtual assets that have been tested for a long enough time, have sufficient market depth, and a pricing discovery mechanism. According to the SFC's circular, limiting collateral to these assets is a prudent stance "to respond to the development of the virtual asset market and virtual asset financing," and the SFC retains the power to modify the haircut rate with prior notice. This is a typical arrangement of "learning-based regulation"—starting from a small-scale pilot with a high safety margin, gradually expanding after accumulating data.
Why are perpetual contracts limited to professional investors? Because the risk-return characteristics of derivative leverage far exceed the cognitive ability of ordinary retail investors. The funding fee mechanism, marked price algorithm, and forced liquidation threshold of perpetual contracts constitute a complex risk transmission chain. According to PANews analysis, high leverage positions often trigger forced liquidation within extremely narrow price fluctuation ranges—a 100x leverage position has approximately 0.5% price fluctuation space from opening to triggering forced liquidation. Isolating such products within the professional investor scope is a widespread regulatory principle endorsed by the IOSCO, and Hong Kong's framework aligns closely with this.
Why allow affiliates to act as market makers while installing firewalls? Because the liquidity depth of the virtual asset spot market is not sufficient to attract independent third-party market makers to enter on a large scale. According to a report published by Odaily on January 2026, PAXG's effective depth on both buy and sell sides was below $3 million on the Binance spot market, with slippage of up to 150 basis points for a $4 million trade, whereas similar-sized gold futures on the Chicago Mercantile Exchange had negligible slippage. In this context, introducing affiliate market makers is a realistic liquidity solution, but it must be predicated on strict conflict of interest controls.
Compliance professionals have also raised cautious doubts about this framework. An anonymous partner at a Hong Kong law firm pointed out during an interview that the volatility of virtual assets is far higher than that of traditional securities, and directly applying securities margin rules could underestimate tail risks. For example, in October 2025, PAXG experienced two instances of abnormal volatility on the Binance spot market within a week, dropping by 10.6% and surging by 9.7%, which can almost be assuredly attributed to weak order book conditions rather than fundamental changes. If similar volatility occurs in leveraged trading scenarios, it may trigger a chain liquidation.
In response, the SFC did not deny the existence of risks. On the contrary, the circular distinctly warns that "virtual assets have underperformed during significant systemic shocks" and requires virtual asset brokers to continuously identify and monitor risks inherent in their margin loan portfolios concerning vulnerable virtual assets and maintain the ability to monitor collateral fluctuations in real-time and take timely action. This proactive disclosure of risk precisely reflects the pragmatic attitude of regulators: leverage cannot be zero-risk, but it is the responsibility of regulation to ensure that risks are fully identified, priced, and isolated.
3. The Liquidity Dilemma of RWA: Why We Need This "Leverage Tool"?
At this point, a key question emerges: why does the RWA Research Institute dedicate such extensive analysis to a policy aimed at virtual assets?
The answer is: the current liquidity crisis in the RWA market is even more severe than that of the virtual asset market; and the absence of leveraged tools is one of the core issues of this crisis.
In January 2026, Odaily published an in-depth report titled "When Big Capital Takes It Seriously, RWA's Liquidity Issues Emerge," revealing the liquidity reality of tokenized assets with detailed data.
In the tokenized gold market, the liquidity constraints of PAXG and XAUT in centralized exchanges are very evident. When the nominal trading volume reaches $4 million, the slippage of perpetual contracts is close to 150 basis points; while in the Chicago Mercantile Exchange, the equivalent-sized gold futures trading slippage curve almost approaches the horizontal axis, with price impacts for a $20 million trade being less than 3 basis points.
In the tokenized stock market, the situation is even more severe. TSLAx and NVDAx are currently among the top-ranked tokenized stocks by market capitalization. On the Jupiter platform, a $1 million transaction of TSLAx has approximately 5% slippage; while the slippage for NVDAx is as high as 80%, nearly losing its tradability. In contrast, on the NASDAQ market, the price impacts for equivalent-scaled Tesla or NVIDIA stock trades are just 18 basis points and 14 basis points—this does not even factor in off-market liquidity channels like dark pools.
In the AMM DEX domain, liquidity conditions are even worse. In February 2025, a trade valued at 2,912 USDT resulted in a user purchasing approximately $1,731 worth of XAUT based on the then-actual gold price, paying a premium of up to 68%. Over the past six months, the average slippage for trades of XAUT and PAXG on Uniswap has consistently ranged between 25 to 35 basis points, with certain periods even exceeding 50 basis points.
Even more alarming is the systemic risk transmission caused by insufficient liquidity. In mid-October 2025, PAXG experienced abnormal volatility on the Binance spot market; because Binance's spot holdings occupied the highest weight in the Hyperliquid’s oracle construction, these two volatility events resulted in $6.84 million in long positions and $2.37 million in short positions being liquidated on Hyperliquid, with the liquidation scale even exceeding that of Binance itself. This indicates that a market suffering from insufficient liquidity can amplify and propagate volatility across multiple trading venues.
Odaily attributed the liquidity scarcity to structural issues: market makers must first complete asset minting to provide liquidity, and the minting process often involves operational coordination, KYC reviews, custodial settlement—market makers need to pre-fund and wait for hours or even days to truly obtain tokenized assets; the redemption period spans from T+1 to T+5, accompanied by daily or weekly limits. From the market maker's perspective, this kind of inventory largely equates to "low liquidity assets," with capital efficiency far lower than hedged positions that can be closed at any time in the crypto market.
In such market structures, the introduction of leverage tools may be the key breakthrough to break the cycle of liquidity exhaustion. The reason is that leveraged trading inherently requires high-frequency price discovery and real-time risk management, which will compel market makers to engage deeply in market quoting, thus narrowing bid-ask spreads and increasing order book thickness; and a sufficiently deep spot market would allow tokenized assets to genuinely serve as reliable collateral, further releasing their financial utility.
This is precisely the core insight of the SFC's February 11 regulations for the RWA field. Although virtual assets and RWAs differ greatly in the nature of their underlying assets, they face the same regulatory proposition: how to establish a compliant leveraged channel for digital native assets under the premise of manageable risk.
4. "Catching Up" for RWA: The Fourfold Demonstrative Significance of the New Regulations
Revisiting the SFC's February 11 regulations in the context of RWA allows us to distill four progressive layers of demonstrative significance.
First Layer: Collateral Framework—Setting the "Passing Line" for RWA Leverage
The treatment of collateral in the new regulations provides a direct reference for future RWA margin financing. The decision to limit qualified collateral to the two major currencies sends a very clear signal: regulatory agencies will not treat all digital assets equally but will implement tiered management of collateral based on objective indicators such as market capitalization, liquidity depth, and price stability.
Mapped to the RWA field, this means that the collateral value of different underlying assets will be highly differentiated. Tokenized U.S. Treasury bonds (such as BlackRock's BUIDL and Franklin Templeton's BENJI) possess stable cash flows and extremely low credit risks, but their secondary market trade depth is far less than that of Bitcoin; tokenized real estate or private credit faces even more severe non-standard issues and longer clearing cycles. It can be reasonably expected that the SFC will set the haircut rates for RWA collateral in line with the cautious principle of starting "from 60% for virtual assets" and implement differentiated haircuts based on the liquidity ratings of underlying assets.
Second Layer: Perpetual Contract Framework—The "Transparency" Template for RWA Derivatives
The high-level framework for perpetual contracts in the new regulations essentially represents asystematic transplantation of traditional derivatives regulatory principles to the digital asset realm. The framework's requirements for "high transparency product design, clear disclosures, and solid operational monitoring measures" are not unique inventions for cryptocurrency markets, but rather common standards in global derivatives regulation.
This holds significant referential value for the design of RWA derivatives. Suppose a licensed platform intends to launch a forward contract with tokenized green bonds as the underlying asset; it must address questions such as: Is the contract's valuation model publicly verifiable? Do margin collection standards dynamically reflect market volatility? How can the price trigger for liquidation be protected from manipulation by a single abnormal trade? Is the loss-sharing mechanism fair and transparent? While the SFC's February 11 regulations do not provide specific answers to these questions, they comprehensively list the questions that need to be answered. For compliance-conscious RWA project teams, they can now use this checklist to conduct pre-design simulations.
Third Layer: Affiliate Market Making—Model for RWA Liquidity Solutions’ "Chinese Wall"
The new regulations allowing platform affiliates to act as market makers provide a systematic model to solve the liquidity cold start problem in the RWA market.
The RWA market faces the classic "chicken or egg" dilemma: insufficient liquidity discourages trader participation, while the lack of traders deters market makers from providing liquidity. Introducing affiliate market makers is an effective means to break this cycle, but its largest obstacle is the conflict of interest—affiliated companies might leverage information advantages to prioritize their own trades or manipulate prices through market-making activities.
The SFC's solution is a systematized firewall, rather than simple identity segregation. The protective measures disclosed by Kingston Lai include: prioritization of client instructions, effective identification of market-making activities, requirements for functional independence, and information segregation systems. This mechanism provides a replicable compliance framework for RWA platforms to bring in affiliate liquidity, grounded in the core idea that: Affiliate market making is not an original sin; the lack of controlled conflict of interest is.
Fourth Layer: Digital Asset Accelerator—A "Dialogue Mechanism" between Regulation and Market
The Digital Asset Accelerator announced by Kingston Lai at the Consensus conference may be the most valuable long-term initiative among the three measures.
The accelerator is positioned as a "systematic communication channel" between the SFC and industry innovators, providing clear guidance for market builders through designated agents, supporting innovative developments while assisting regulatory agencies and industry participants in efficiently allocating resources, and exploring new market maker models, financing mechanisms, and leveraged products.
This marks a significant evolution in the regulatory methodology of the Hong Kong SFC: shifting from a one-directional relationship of "rule makers and rule followers" to a two-way interactive collaborative governance between "regulation and market." For the RWA industry, the accelerator offers a systematic window—when project teams need to communicate with regulators regarding new product designs, they no longer need informal channels for probing; instead, they can obtain clear compliance guidance through the accelerator.
This is particularly crucial for many RWA innovations currently situated in a "regulatory gray area." Taking tokenized private credit as an example, its underlying assets' non-standard attributes, valuation frequency, transfer restrictions, and other characteristics significantly differ from standardized securities; directly applying existing rules often leads to a "square peg in a round hole." Through the accelerator mechanism, RWA project teams are expected to jointly explore differentiated regulatory pathways that apply to non-standard assets with regulators.
5. Leverage is a Ruler, Measuring Hong Kong's Ambition
Returning to the new regulations as of February 11.
In Kingston Lai's concluding remarks at the Consensus conference, he stated: "Liquidity is not intrinsic but must be cultivated in an open market environment, a sound governance framework, and clear regulatory design."
This statement is worth savoring. It indicates that the SFC has an extremely clear self-awareness of what they are doing—they are not "loosening regulation," but "designing liquidity." The 60% haircut rate is not a lack of trust in the market but an objective pricing of volatility risk; the high-level framework for perpetual contracts is not strangling innovation but defining a safe boundary for it; the firewall for affiliate market making does not exclude liquidity but enables it to flow in an orderly manner through supervised channels.
This methodology's implications for the RWA market are fundamentally more significant than several specific policies.
The large-scale application of RWA has never been a purely technical or legal issue, but a regulatory engineering issue. Asset tokenization can be completed in a matter of minutes, but liquidity takes years to nurture; smart contracts can automate settlement, but risk pricing requires continuous interaction among market participants; regulatory frameworks can be released overnight, but the accumulation of regulatory capability requires lengthy trial-and-error iterations.
The SFC's ASPIRe roadmap and February 11 regulations are exemplary practices of this regulatory engineering. They have not chosen a "one-size-fits-all" prohibition on the digital asset market, nor have they opted for "hands-off governance." Instead, they have chosen a more challenging path: treating highly volatile virtual assets as a learning laboratory for regulation, gradually accumulating experience and capabilities under manageable risk conditions, and then migrating mature methodologies to the broader RWA field.
This means two things for RWA practitioners.
- First, the window for compliant leverage is opening, but the thresholds are much higher than expected. The 60% haircut rate, transparency disclosure obligations, and conflict of interest firewalls—these regulatory tools matured in the virtual asset market will be replicated in the RWA market. Attempts to circumvent regulation or engage in regulatory arbitrage by masquerading as "decentralized" projects will find it very difficult to enter Hong Kong's licensed ecosystem.
- Second, now is a golden window period to learn these regulatory tools. As data in the virtual asset market continues to accumulate, as the first batch of compliant products under the perpetual contract framework operates smoothly, and as the digital asset accelerator establishes a normalized regulatory communication mechanism— the SFC will be equipped to migrate this methodology at scale to the RWA field. At that time, the project teams that can promptly present compliant leverage product schemes, market maker institutional designs, and risk disclosure frameworks will have the first-mover advantage in defining the market.
On February 11, 2026, the step taken by the SFC may one day be reassessed for its historical significance. On that day, while major global financial centers held a conservative attitude toward crypto leverage, Hong Kong chose a middle road: not rejecting leverage, but putting a "transparency disclosure" and "firewall" bridle on it.
This bridle will also be placed on RWA products in the future.
Author: Liang Yu Editor: Zhao Yidan
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