Two systems, opposite approaches

Greater China’s crypto fund landscape is defined by a single, stark divide. Hong Kong is pursuing the most ambitious virtual asset regulatory framework in Asia. Mainland China has banned everything, including, as of late 2025, stablecoins. There is no middle ground between these two positions, and the gap is widening.

For crypto fund managers, this creates a specific dynamic: Hong Kong functions as the regulated gateway for Chinese-speaking talent, capital, and institutional relationships that can’t operate from the mainland. Many of the most prominent crypto funds in Asia were founded by Chinese nationals who relocated to Hong Kong (or Singapore) after the mainland crackdowns. The people and expertise are Chinese. The legal structure and regulatory home are Hong Kong.

Some analysts describe this as deliberate. Beijing, the argument goes, uses Hong Kong as a controlled sandbox to observe how digital asset regulation works without exposing the mainland financial system. Whether that’s strategic calculation or just the natural result of “One Country, Two Systems” is debatable. Whats not debatable is the outcome: Hong Kong is open for crypto fund business, and mainland China is not.

Hong Kong’s crypto fund framework

Hong Kong regulates crypto fund activities through the Securities and Futures Commission (SFC) under the existing Securities and Futures Ordinance (SFO) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). The basic principle is “same business, same risks, same rules.” Crypto funds get treated like traditional funds, with additional requirements for the unique risks of digital assets.

Here’s how it works in practice. Licensed asset managers (Type 9 license under the SFO) who want to manage crypto portfolios need SFC approval. They must have at least one responsible officer with three or more years of virtual asset portfolio management or proprietary trading experience. The fund must have 24-hour active supervision (crypto markets don’t close), and there are specific requirements for custody, counterparty risk, and AML/KYC.

The SFC has been expanding what licensed managers can do. In the last year, the SFC began allowing certain managers to trade on Deribit and Binance, two of the world’s largest crypto derivative exchanges. That’s a meaningful shift. Previously, SFC-licensed funds were mostly limited to Hong Kong-licensed exchanges. Now they can access global liquidity, which makes the strategies more viable and the products more competitive.

One important detail: the fund itself doesn’t need to be incorporated in Hong Kong. An SFC-licensed manager can manage a Cayman-domiciled fund from Hong Kong. This is the typical structure for institutional crypto hedge funds in the region. The management team sits in Hong Kong under SFC oversight, and the fund vehicle sits in the Cayman Islands for the reasons offshore domiciles always make sense.

The ASPIRe roadmap and what’s coming in 2026

In June 2025, the Financial Services and Treasury Bureau (FSTB) released its second policy statement on digital assets, introducing the “LEAP” framework. The five pillars stand for Liquidity, Efficiency, Access, Products, and Infrastructure. The vision is to build a complete, end-to-end regulatory structure for every part of the crypto value chain.

The SFC’s ASPIRe roadmap is the operational plan behind that vision. Here’s what has already happened and what’s coming:

Already done: VATP (exchange) licensing under AMLO, effective June 2023. Spot Bitcoin and Ether ETFs approved and listed in April 2024. Staking permitted for licensed exchanges and ETFs (up to 30% of holdings) as of April 2025. Stablecoin Ordinance effective August 2025. VATPs can now access global liquidity through affiliated exchanges and offer expanded products (as of November 2025).

Coming in 2026: Licensing regimes for virtual asset dealers (OTC desks, brokers) and custodians. Licensing for virtual asset advisors and portfolio managers, with the consultation closing January 2026. Critically, the new advisor/manager licensing removes the old 10% de minimis threshold. Previously, if a portfolio had less than 10% in virtual assets, the manager didn’t need special licensing. That exemption is going away. Any portfolio investing in virtual assets, regardless of allocation size, will require proper licensing.

That last point is worth pausing on. It means every hedge fund in Hong Kong with even a small Bitcoin allocation will eventually need to comply with the VA licensing framework. The SFC is making clear that there’s no way to touch crypto without being properly regulated for it.

Hong Kong’s spot crypto ETFs

Hong Kong made history in April 2024 by listing Asia’s first spot Bitcoin and Ether ETFs. This happened before most Asian jurisdictions had figured out how to handle crypto in any regulated product format. The ETFs accept in-kind subscriptions and redemptions (you can deposit BTC or ETH directly), which is something the US spot Bitcoin ETFs don’t offer.

The SFC subsequently allowed two of the listed ETFs to stake up to 30% of their Ether holdings, generating additional yield for investors. That’s another feature US-listed crypto ETFs haven’t matched. For allocators who want regulated crypto exposure with yield enhancement, Hong Kong’s ETF offerings are currently the most feature-rich in Asia.

That said, volumes have been modest compared to the US spot Bitcoin ETFs, which pulled in tens of billions in their first year. Hong Kong’s market is smaller, and the retail investor base in the region was more cautious after the 2022 bear market. But the products exist, they’re regulated, and they’re gradually improving. The SFC has signaled it will consider expanding the eligible token list over time.

The stablecoin play

The Stablecoin Ordinance took effect on August 1, 2025. It created a dedicated licensing regime for fiat-referenced stablecoin issuers, administered by the Hong Kong Monetary Authority (HKMA). The requirements are substantial: minimum paid-up capital of HKD 25 million, full reserve backing with high-quality liquid assets, and strict KYC/AML compliance.

What makes this interesting for the fund landscape is who’s applying. As of early 2026, the HKMA had received over 36 license applications. Among them: JD.com (through JD Coinlink, pursuing an HKD-pegged stablecoin), Ant Group, and a joint venture between Animoca Brands and Standard Chartered. These are major Chinese institutions channeling their digital asset ambitions through Hong Kong precisely because they can’t do it on the mainland.

For crypto funds operating in the region, regulated stablecoins in Hong Kong could eventually create a more efficient settlement layer for fund subscriptions and redemptions. Today, most crypto funds use USDC or USDT for operational purposes, neither of which is issued under a Hong Kong regulatory framework. A locally licensed stablecoin changes that equation.

Beijing’s position on this is complicated. In late 2025, eight state regulators reaffirmed the mainland ban on crypto activities, explicitly including stablecoins. But Hong Kong pressed ahead anyway. The HKMA is expected to issue an initial batch of licenses in early-to-mid 2026. Hong Kong is using its autonomy to prove that stablecoins can be properly supervised, even if Beijing hasn’t endorsed the concept for the mainland.

Mainland China: the complete ban

China’s ban on crypto has been progressive and is now comprehensive. The initial Bitcoin transaction restrictions came in 2013. ICOs were banned in 2017. Mining and all crypto trading were prohibited in 2021. In November 2025, the government extended the ban to explicitly cover stablecoins, closing what many considered the last grey area.

The enforcement infrastructure is serious. The People’s Bank of China directs financial institutions to block crypto-related transactions. The Cyberspace Administration monitors and shuts down websites, apps, and social media accounts. Banks are required to flag and freeze accounts associated with crypto activity. Penalties include criminal prosecution, transaction suspension, and asset seizure.

Despite all of this, China reportedly still has an estimated 59 million crypto holders who use VPNs, peer-to-peer platforms, and offshore exchanges. The gap between policy and practice is real, but it’s a legal risk that no institutional fund can take.

China is not anti-blockchain. That distinction matters. The government is investing an estimated 400 billion yuan ($54.5 billion) annually in blockchain infrastructure over a five-year roadmap. The digital yuan (e-CNY) has processed over 14.2 trillion RMB in cumulative transactions. The Blockchain Service Network (BSN) is a state-backed infrastructure project. China wants blockchain technology. It does not want private, decentralized cryptocurrencies that sit outside state control.

Where Chinese-founded crypto funds actually operate

A significant number of prominent crypto funds were founded by people who started their careers in mainland China. After the various crackdowns, most relocated to Hong Kong, Singapore, or both. The talent pipeline is Chinese. The legal and operational infrastructure is offshore.

The split between Hong Kong and Singapore is roughly what you’d expect. Hong Kong is closer to mainland China, shares a language, and has deep ties to traditional Chinese financial institutions. Singapore is more neutral, has a slightly lighter regulatory touch for smaller managers, and is increasingly popular with crypto-native firms that want distance from any mainland association.

Fund types vary. Hong Kong-based managers tend to skew toward institutional strategies: long/short, quantitative, and fund-of-funds. These are managers who came from traditional finance backgrounds in Shanghai, Beijing, or Shenzhen and adapted their skills to crypto. Singapore-based Chinese-founded funds tend to be more crypto-native: early-stage VC, DeFi strategies, and market making.

The fund vehicles are almost always domiciled in the Cayman Islands or BVI, regardless of where the team sits. The management entity holds the appropriate local license (SFC Type 9 in Hong Kong, CMS license in Singapore).

What allocators should know

If you’re evaluating Hong Kong-based crypto fund managers, here are the practical considerations.

SFC licensing is a strong signal. Getting and maintaining a Type 9 license with VA approval is not trivial. The SFC’s requirements for experience, supervision, custody, and compliance are genuinely rigorous. A licensed manager in Hong Kong has been vetted in a way that many offshore-only managers have not. It’s not a guarantee of performance, but it’s a meaningful baseline for operational quality.

Custody matters more here than elsewhere. The SFC has specific expectations about custody arrangements. The regulator generally requires funds to use regulated exchanges and counterparts with proper AML, cybersecurity, and custody measures. Licensed VATPs in Hong Kong, the US, UK, Dubai, and Japan are acceptable. Self-custody raises compliance questions. If a manager you’re evaluating doesn’t have a clear custody arrangement that satisfies SFC standards, that’s a red flag. See our custodian guide for more detail.

Watch for the 2026 licensing changes. When the new VA advisor and manager licensing takes effect, some funds that were operating in a grey area (small crypto allocations, advisory-only arrangements) will either need to get licensed or exit the space. This could cause some disruption in the short term but will ultimately strengthen the ecosystem.

The mainland connection is context, not risk. A fund manager who was born in China, educated at Tsinghua, and worked at a Shanghai hedge fund before moving to Hong Kong is a common profile. That background is an asset, not a liability. The Chinese technical and financial talent pool is deep. What matters is where the fund is regulated and domiciled now, not where the founder grew up.

For a broader look at what to check when evaluating any crypto fund manager, see our due diligence checklist and manager evaluation guide.

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Crypto funds in Singapore and Southeast Asia · Cayman Islands and offshore jurisdictions · Middle East and UAE · United States · European crypto funds · Crypto fund custodians · Due diligence checklist