The Circular on tokenisation of SFC-authorised investment products is Hong Kong Securities and Futures Commission (SFC) agency guidance for product providers seeking to tokenise investment products authorised under Part IV of the Securities and Futures Ordinance for offering to the Hong Kong public. The current profile reflects the version revised on 20 April 2026, which replaced the SFC’s November 2023 circular and links the tokenisation framework to separate requirements for secondary trading on SFC-licensed virtual asset trading platforms.
What the SFC tokenisation circular covers
The circular treats tokenised SFC-authorised investment products as traditional authorised products with a tokenisation layer. The SFC describes tokenisation of investment products as the creation of blockchain-based tokens representing, or seeking to represent, ownership in an investment product. The tokenised product may be digitally recorded on a blockchain, offered directly to end investors, distributed by SFC-licensed intermediaries, or traded among blockchain participants where allowed.
The guidance uses a “see-through” approach. Primary dealing, meaning subscription and redemption of a tokenised product, may be considered where the underlying product meets the applicable product authorisation requirements and additional safeguards address tokenisation-specific risks. The revised circular also states that secondary trading may be allowed on SFC-licensed virtual asset trading platform operators, subject to the companion secondary trading circular.
Key provisions for product providers
- Underlying product compliance: Product providers should ensure the underlying product continues to meet applicable rules, regulations and product codes, including product structure, investment, operational, disclosure and ongoing compliance obligations.
- Responsibility for tokenisation arrangements: Product providers remain ultimately responsible for the management and operational soundness of the tokenisation arrangement and for ownership record-keeping, even where technology or other functions are outsourced.
- Technology and operational safeguards: The circular addresses cybersecurity, data privacy, system outages, recovery planning, business continuity and smart contract integrity. It also states that public-permissionless blockchain networks should not be used without additional proper controls, such as a permissioned token.
- Disclosure: Offering documents should clearly explain the tokenisation arrangement, whether settlement finality occurs on-chain or off-chain, the ownership representation of the tokens and material risks such as cybersecurity incidents, system outages, technical flaws and legal uncertainty.
- Regulated distribution and competence: Distributors should be regulated intermediaries, such as SFC-licensed corporations or registered institutions, and product providers should confirm that they have competent staff with relevant experience to operate or supervise the tokenisation arrangement.
Secondary trading and market-structure link
The revised tokenisation circular cross-refers to the SFC’s 20 April 2026 secondary trading circular. That companion guidance is principally designed for on-platform secondary trading of SFC-authorised open-ended funds and says secondary trading may be offered to retail investors through on-screen auto-matching trading on SFC-licensed VATPs. It covers trading channel operation, pre-launch testing, fair pricing controls, price deviation alerts, liquidity provision, disclosure, client onboarding and notification.
For secondary trading, product providers are expected to monitor liquidity, maintain market-maker arrangements where applicable, appoint SFC-licensed distributors or registered institutions for creation and redemption requests, and put arrangements in place for transferability between primary and secondary markets. SFC-licensed VATPs and connecting brokers are expected to provide dedicated online interfaces with trading details, market-making information, indicative NAV or last NAV information, fees and risk disclosures.
Status and approval process
As of 17 June 2026, this profile treats the circular as in force agency guidance in Hong Kong. It is not an act of the Hong Kong legislature; it is SFC guidance describing the circumstances in which the regulator would consider tokenisation of SFC-authorised investment products. New products with tokenisation features require prior consultation with the SFC. Tokenisation of existing SFC-authorised products, and material changes to tokenisation arrangements, also require prior consultation and may require prior approval.
Jurisdictional impact
The circular is relevant to Hong Kong product providers, fund managers, SFC-licensed intermediaries, registered institutions, distributors, virtual asset trading platform operators and service providers involved in tokenised authorised products. Its practical effect is to place tokenisation within the existing public-offering and product-authorisation perimeter while adding safeguards for ownership records, technology risk, disclosure and regulated access.