Hong Kong legislator Wu Jiezhuang revealed that Hong Kong will release stablecoin consultation and sandbox (computer security mechanism), which will allow the industry to innovate digital asset projects in the sandbox environment. Relevant legislation will be reviewed in the Legislative Council at the end of this year or next year, which will help the entire digital asset industry ecosystem. Hong Kong has been improving the digital asset (virtual asset) market on different legal levels. Last year, there were regulations on virtual currency trading platforms and issuance systems.

Yitong Communications Group, a Hong Kong-listed company, announced its performance report as of the end of 2023. As of December 31, 2023, the company held a total of 165,385 shares of Hong Kong Virtual Asset Exchange (VAX), accounting for approximately 8.14% of the issued share capital of VAX, with a fair value of approximately HKD 1,543,000. It is reported that VAX is applying to the Hong Kong Securities and Futures Commission for a Type 1 (securities trading) and Type 7 (providing automated trading services) regulated activity license under the Securities and Futures Ordinance for regulating virtual asset trading platforms.

The Hong Kong Monetary Authority (HKMA) has announced the launch of the second phase of its e-HKD central bank digital currency (CBDC) pilot. The regulator will build on the first phase, which tested the use of a CBDC in domestic retail payments, offline payments and settlement of tokenised assets, and explore new applications for a digital version of the Hong Kong dollar. The second phase will focus on select pilots from the first phase, such as programmability, tokenisation and atomic settlement, and also explore new use cases. The HKMA has also started a regulatory sandbox project to test CBDCs for wholesale use and tokenisation.

The Hong Kong Monetary Authority (HKMA) announced on March 7 the launch of Project Ensemble, which focuses on studying the tokenization of private bank deposits using wholesale central bank digital currency (WCBDC). The institution clarified that the project will study the potential benefits to the financial system of tokenizing deposits using WCBDC, including optimizing interbank settlements. Nevertheless, the WCBDC, which is the core of the system, will also be part of the sandbox aimed at testing its application for other purposes, such as settling tokenized real-world assets (RWA).

The Hong Kong Monetary Authority (HKMA) has announced the launch of a new wholesale-level central bank digital currency (wCBDC) project called Ensemble to support the development of Hong Kong's tokenized market. The focus of the Ensemble project is the HKMA's sandbox for wCBDC, which will be launched this year. The sandbox will further study and test tokenization use cases, including the settlement of tokenized real-world assets (such as green bonds, voluntary emission reductions, airplanes, electric vehicle charging stations, electronic bills of lading, and treasury management). It is more likely to develop into new financial market infrastructure, serving as a bridge between tokenized real-world assets and tokenized currencies in transactions.

At least 22 crypto firms, including industry giants like OKX, ByBit, and Huobi HK, have applied for operational licenses in Hong Kong. If approved, these firms will be able to offer retail trading services in the region and contribute to Hong Kong's efforts to become a major crypto hub. Hong Kong's clear regulatory framework has attracted many crypto-based firms looking for a conducive environment for their businesses to thrive. The influx of diverse players promises to foster healthy competition and innovation within the sector, while also reflecting a broader trend of regulatory compliance and institutional acceptance within the crypto industry.

The Hong Kong Exchanges and Clearing Limited announced that Charles Li Xiaojia had retired as the Chief Executive Officer and a member of the Board of Directors of the Hong Kong Exchanges and Clearing Limited. Starting from March 1st, 2024, Nicolas Aguzin has been appointed as the Chief Executive Officer and a member of the Board of Directors of the Hong Kong Exchanges and Clearing Limited. Aguzin's appointment means that the Hong Kong Exchanges and Clearing Limited welcomes its first female CEO in history. Aguzin, 54 years old, holds a Bachelor of Laws degree from the University of Hong Kong and a Master of Laws degree from Harvard Law School in the United States. She has more than 30 years of experience in legal and financial services. In January 2020, Aguzin joined the Hong Kong Exchanges and Clearing Limited as the Chief Executive Officer of the Listing Division and was previously the Co-Chief Operating Officer of the Hong Kong Exchanges and Clearing Limited.

Hong Kong Securities and Futures Commission has issued a warning to the public to beware of a suspicious investment product called "Yieldnodes masternode pool" operated by Exceptional Media Limited, a company registered in Hong Kong. The product involves crowdfunding related to cryptocurrency pledging, and has not been approved by the Securities and Futures Commission for sale to the Hong Kong public, and is suspected of violating the Securities and Futures Ordinance. The Hong Kong Securities and Futures Commission noted that the Hong Kong public can access information about the product through the relevant website of the product and multiple social media accounts managed by its management on Facebook, Discord, X, LinkedIn, and Instagram. It has been reported that investors have encountered problems when trying to retrieve their investments in the product. The Hong Kong Securities and Futures Commission has listed the product and its related information on the suspicious investment product warning list as of February 28, 2024, and hereby warns investors to beware of "returns" or "pledges" related to virtual assets, and will take appropriate action against any illegal behavior.

The Financial Secretary of the Hong Kong Special Administrative Region Government, Paul Chan Mo-po, mentioned the latest developments of the Digital Hong Kong Dollar and Digital Renminbi in Hong Kong when releasing the "Budget for 2024-2025". Regarding digital finance, Chan Mo-po stated that the Hong Kong Monetary Authority completed the first phase of the pilot program for "Digital Hong Kong Dollar" (i.e. "Digital Currency at Cyberport") in October last year, studying local retail use cases in multiple categories, such as programmable payments, offline payments, tokenized deposits, etc. The second phase of the pilot program is about to be launched to further study new use cases. Another key project, the "mBridge" (also known as the "Currency Bridge Project") for the cross-border network of central bank digital currencies, has also made progress, and the first phase of services is expected to be launched this year, becoming one of the first projects in the world to settle cross-border transactions of enterprises using central bank digital currencies. In addition, the trial scope of the digital renminbi will be expanded in Hong Kong, and citizens will be able to easily open and use digital renminbi wallets and add value through Hong Kong's fast retail payment system "Faster Payment System", further improving cross-border payment efficiency and user experience.

According to industry insiders, Hong Kong virtual asset trading platform (VASP) license applicants include exchanges that previously held the No. 1 and No. 7 licenses. There are many companies operating over-the-counter (OTC) virtual asset trading outside the market, such as virtual currency exchange shops. The Hong Kong Financial and Treasury Bureau has previously consulted on the regulation of virtual asset OTC. The insider expects that after the transition period expires, if the existing platforms operating in Hong Kong have not submitted their applications, they may either end their business in Hong Kong or continue operating overseas or even underground.