Asia Regulatory Update (April 2026)

The key elements of the framework include:

• Licensing: Only two licenses were granted in the first batch to HSBC and Anchorpoint Financial (a joint venture led by Standard Chartered, including Animoca Brands and Hong Kong Telecommunications). Of the 36 initial applicants, the HKMA issued licenses only to these two traditional bank-backed entities, signaling a prudent regulatory approach prioritising risk management and operational resilience.
• Capital Requirements: Issuers must maintain substantial minimum financial resources, including a significant minimum paid-up capital, dedicated liquid capital and additional liquid capital sufficient to cover the issuer’s operating expenses for a minimum of 12 months, as set out in the HKMA’s supervisory guidelines for stablecoin issuers.
• Reserve Assets: Stablecoins must be fully backed at all times by high-quality, highly liquid reserve assets, which must be segregated from the issuer’s own assets and denominated in the same reference currency.
• Investor Protection: Holders have a right to redeem stablecoins at par value within one business day, and issuers are prohibited from paying interest or imposing unreasonable fees on redemptions.

1.2 HKMA Fintech Promotion Blueprint

On 03 February 2026, the HKMA published its Fintech Promotion Blueprint, a strategic execution framework under its Fintech 2030 strategy to advance responsible innovation and the sophisticated application of artificial intelligence (AI) and distributed ledger technology (DLT) in the banking sector. The Blueprint aims to strengthen the banking sector’s risk management capabilities when deploying advanced technologies by establishing foundational pillars of data excellence and cyber resilience. It also fosters ecosystem collaboration, technological evolution and talent development to support Hong Kong’s transition from fintech adoption to advanced application.

Key highlights:

• Quantum Readiness Index: A new index will assess the banking sector’s preparedness for post-quantum cryptography (PQC), addressing the potential threat quantum computing poses to existing encryption systems. The index will provide quantifiable targets to guide the industry’s transition to quantum-safe security.
• Fintech Cybersecurity Benchmark: The HKMA will collaborate with the industry to develop a standardised, industry-led cybersecurity benchmark specifically for fintech companies, focusing on AI and DLT applications. This benchmark will provide clear security guidance and enhance due diligence efficiency when banks onboard fintech partners.
• New Risk Data Strategy: A new data strategy will be implemented to strengthen banks’ data management capabilities through improved data governance frameworks and advanced infrastructure, enabling more sophisticated analysis of both structured and unstructured data for risk management.
• Talent Development Support: The HKMA will partner with the industry to provide practical guidance on ‘human-machine interaction’ skills, enabling practitioners to better integrate AI and DLT into next-generation financial products and services.

1.3 AI Governance

On 05 March 2026, the HKMA, SFC, Insurance Authority (IA) and Mandatory Provident Fund Schemes Authority (MPFA) jointly launched the GenA.I. Sandbox++, an expansion of the 2024 Supervisory Sandbox initiative. The new sandbox extends coverage to banking, securities, asset management, insurance, Mandatory Provident Fund (MPF) operations and stored value facilities.

The primary purpose of the GenA.I. Sandbox++ is to facilitate the responsible adoption of generative AI across the financial services sector by providing a controlled testing environment where participants can experiment with innovative AI applications under regulatory supervision. In addition, the sandbox supports the development of governance frameworks and risk management practices tailored to the unique challenges posed by generative AI, including model explainability, data privacy and operational resilience.

Participants receive direct supervisory guidance from the four regulators, along with GPU computing access at Cyberport’s AI Supercomputing Centre, reflecting a coordinated cross-regulatory approach to fostering responsible AI adoption. Applications are open until 30 June 2026.

1.4 Extending Virtual Asset (VA) Services to Margin Financing

On 11 February 2026, the SFC issued new guidance extending virtual asset (VA) services to margin financing for licensed brokers that provide VA dealing services (VA brokers) and outlined a high-level framework for VA trading platforms (VATPs) to develop VA-related leveraged products intended for professional investors.

The guidance expands the scope of permissible VA-related activities for licensed intermediaries, enabling VA brokers to offer margin financing services with appropriate risk management controls in place. Also, it provides a foundational framework for VATPs to develop leveraged products, facilitating product innovation while maintaining investor protection standards for professional investors.

1.5 Trade Reporting for OTC Derivatives

On 16 March 2026, the SFC issued a circular on updates to the HKMA’s over-the-counter (OTC) derivatives trade reporting requirements, outlining key operational enhancements following the September 2025 implementation of the HKMA Rewrite Framework.

A key objective of the amendments is to complete the transition to the ISO 20022 messaging format by introducing data archiving capabilities and setting a final deadline for the migration of long-dated legacy trades. In parallel, the revised Sunday maintenance window aims to improve operational resilience by minimising disruption to market participants during reporting system updates.

ISO 20022 data archiving is now operational and the legacy trade migration window closed on 29 March 2026. Reporting entities were required to ensure all outstanding long-dated trades were migrated by this deadline to maintain compliance.

Figure 1: Differences from September 2025 HKMA Rewrite Framework
Source: HKMA, SFC

1.6 Consultation on Proposed Financial Market Considerations

On 25 February 2026, the Financial Secretary announced in the Budget Speech a package of proposed financial market initiatives aimed at enhancing the competitiveness and efficiency of Hong Kong’s capital markets. These initiatives are currently at the proposal and consultation stage, with formal implementation pending market feedback and subsequent rule amendments.

The primary purpose of these initiatives is to strengthen Hong Kong’s position as an international financial centre by modernising listing frameworks, enhancing market efficiency and aligning with global market practices. It also aims to attract a broader range of issuers and investors by reducing regulatory friction and providing greater flexibility for innovative companies.

Key Proposed Initiatives (Consultation Stage):

• Listing Rule Revisions (weighted voting rights (WVR), Secondary Listings, Biotech): The SFC and Hong Kong Stock Exchange (HKEX) will consult on revised listing requirements for companies with WVR structures, facilitation of secondary listings for overseas issuers (particularly US-listed Chinese companies) and greater flexibility for biotechnology and specialist technology companies. The consultation launched on 13 March 2026.
• T+1 Settlement Transition: HKEX is exploring a transition to T+1 settlement (one day after trade execution) for securities transactions, following similar moves in major markets such as North America (2024) and the EU and UK (anticipated). The initiative aims to reduce counterparty risk, enhance capital efficiency and align Hong Kong with evolving global settlement standards.
• Other Proposed Measures: Additional reforms under consideration include enhancements to the Stock Connect programme, streamlining of IPO processes and further refinements to the regulatory framework for VA and structured products.

Status: All of the above initiatives remain at the proposal and consultation stage, with no implementation dates finalised. Market participants are expected to engage in the consultation processes and formal rule amendments will follow only after feedback is considered.

2. China Regulatory Developments

Chinese regulators introduced landmark frameworks for RWA tokenisation and short swing trading, while the Northbound program trading reporting grace period deadline approached.

2.1 Programmatic Trading Deadline Approaching

On 12 January 2026, the program trading reporting requirements for Northbound Stock Connect investors took effect, with the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) requiring all Northbound programme trading participants to complete information reporting to the exchanges.

A central objective of the reporting regime is to enhance market transparency and regulatory oversight of programme trading activities conducted by Northbound investors, aligning with mainland China’s broader efforts to monitor algorithmic and high-frequency trading strategies. In parallel, the regime applies an ‘internal and foreign consistent’ principle, treating Northbound investors under the same reporting framework as domestic mainland investors.

Key highlights:

• Three-Month Grace Period: Existing Northbound programme trading investors were granted a transitional grace period until 10 April 2026 to complete their initial reports.
• Reporting Path: Northbound investors report to Hong Kong brokers, who submit to HKEX, which then submits the information to SSE and SZSE.
• ECP Platform Upgrade: HKEX upgraded its Electronic Communication Platform (ECP) to accept reporting files. Postrelease testing was completed on 10 January 2026.
• Reporting Scope: The requirements apply to programme trading activities conducted through the Northbound Stock Connect channel, including algorithmic and high-frequency trading strategies.

Status: The reporting requirements are in effect, with the grace period for existing investors ending on 10 April 2026. Market participants should complete their submissions before the deadline to maintain compliance.

2.2 Short Swing Trading

On 06 March 2026, the China Securities Regulatory Commission (CSRC) promulgated the provisions on the Regulation of Short Swing Trading (CSRC Announcement [2026] No. 4), which will take effect on 07 April 2026.

A central objective of the provisions is to implement short swing trading requirements under the Securities Law by clarifying applicable subjects, securities scope and calculation standards. In parallel, the rules introduce differentiated treatment for professional institutional investors, permitting separate calculation of holdings by product to reduce compliance burdens.

Key highlights:

• 12-article Framework: Covers applicable subjects, securities scope, calculation standards, exemptions and professional institution treatment.
• ‘One-End’ Identity Principle: Investors who acquire covered status (5% shareholder, director, supervisor or senior executive) at the time of sale are subject to restrictions, preventing circumvention through identity changes.
• Expanded Securities Scope: Includes depositary receipts, exchangeable corporate bonds and convertible corporate bonds; different types of securities calculated separately.
• Unified Transaction Timing: Determined by the date of securities transfer registration, eliminating ‘trade date versus settlement date; disputes.
• 13 Exemption Circumstances: Covers priority share conversion, ETF subscription / redemption, equity incentives, market-making, judicial enforcement and inheritance; exemptions do not apply where information advantages are exploited.
• Separate Calculation for Institutional Products: Professional institutions (public funds, social security, pension and insurance funds, etc.) may calculate holdings separately by product under independent and standardised operation requirements.
• One-Account-Pass Principle: For eligible institutional products, shareholdings are calculated based on the one account-pass account of each product or portfolio.
• Cross-Channel Aggregation for Foreign Investors: Foreign investors must aggregate holdings across QFI, foreign strategic investment and Stock Connect for short swing trading purposes.
• Stock Connect Nominee Holder Exemption: Hong Kong Securities Clearing Company (HKSCC) is not deemed a 5% shareholder even where holdings exceed that threshold.

Status: The provisions took effect on 07 April 2026.

2.3 Crypto Assets & RWA tokenised Asset-Backed Securities (ABS)

On 06 February 2026, eight central authorities, including the People’s Bank of China (PBOC), China Securities Regulatory Commission (CSRC), National Development and Reform Commission (NDRC) and State Administration of Foreign Exchange (SAFE), jointly issued Notice No. 42, superseding the 2021 Circular. On the same day, the CSRC separately promulgated the Regulatory Guidelines on Offshore Issuance of Asset-Backed Securities Tokens (CSRC Announcement [2026] No. 1), effective immediately.

A central objective of this dual framework is to transition China’s digital asset governance from a blanket prohibition to a ‘categorised regulation’ model, distinguishing between speculative virtual currencies and asset backed tokens based on economic function. The framework establishes a ‘domestic prohibition, offshore strict supervision’ structure that permits controlled cross border RWA issuance through CSRC filing, while maintaining a total ban on onshore Real World Asset (RWA) activities.

Key highlights:

• Notice No. 42: Formally repeals the 2021 Circular and introduces a statutory definition of RWA tokenisation, extending regulatory reach to RWA activities previously governed only by non binding industry risk alerts.
• Virtual Currency & Stablecoin Prohibitions: Bitcoin, Ether, USDT and other virtual currencies remain strictly illegal. A new express prohibition targets RMB pegged stablecoins: no entity may issue RMB linked stablecoins without explicit regulatory approval.
• Expanded Extraterritorial Reach: Domestic entities and their controlled offshore subsidiaries are prohibited from issuing virtual currencies offshore without approval. Notice No. 42 also asserts jurisdiction over offshore service providers that illegally provide RWA related services to onshore entities.
• RWA Tokenisation must be Cross Border Only: Onshore RWA tokenisation activities remain expressly prohibited. Domestic entities may pursue offshore RWA tokenisation subject to a mandatory CSRC filing framework.
• CSRC Guidelines for the Filing Regime: Offshore issuance of asset backed securities tokens backed by domestic assets is defined as a securitisation activity. Key requirements include:
• pre issuance filing with the CSRC
• approved filings published on the CSRC website
• a negative list of prohibited assets and issuers; and
• ongoing reporting of material events.

• Asset Securitisation Framework should Not be Permissionless: The framework operates within traditional ABS regulatory paradigms; it is not a green light for permissionless RWA issuance on public blockchains, but a heavily controlled pathway requiring CSRC oversight.
• Regulatory Division of Labour:
  • CSRC oversees RWA ABS issuance filing and supervision
  • NDRC handles foreign debt type RWA activities
  • SAFE manages cross border capital flows and foreign exchange matters
  • PBOC coordinates Virtual currency oversight and inter-agency coordination; and
  • Financial institutions and intermediaries are prohibited from supporting unapproved activities, with ‘know or should know’ liability extending to enablers.
• Prohibition on Supporting Unapproved Activities: Financial institutions, payment service providers, intermediaries, technology vendors and internet platforms are prohibited from supporting any unapproved RWA or virtual currency activities.
• Hong Kong as the Compliance Hub: With domestic RWA activities prohibited, Hong Kong, operating under its own licensing regime, is well positioned to serve as the designated offshore hub for compliant RWA issuance using domestic assets.

3. Singapore Regulatory Developments

Singapore advanced AI governance with the Monetary Authority of Singapore (MAS) MindForge toolkit, finalised stablecoin rules and launched Project BLOOM (Borderless, Liquid, Open, Online, Multicurrency). The Cyber Security Agency of Singapore (CSA) updated its cybersecurity licensing requirements for service providers.

3.1 MAS MindForge AI Risk Management Toolkit

On 20 March 2026, the Monetary Authority of Singapore (MAS) announced the successful conclusion of phase two of Project MindForge, culminating in the publication of an AI Risk Management Toolkit for the financial services sector. The toolkit was developed collaboratively by a consortium of 24 leading banks, insurance companies and other capital market firms.

A central objective of the toolkit is to translate high-level AI governance principles into operational, actionable guidance for financial institutions managing AI risks across traditional AI, generative AI and emerging agentic AI technologies. In parallel, the toolkit bridges the gap between MAS’ proposed Guidelines on AI Risk Management (AIRG) and practical implementation, allowing firms to evidence compliance while the guidelines are being finalised.

Key highlights of the Toolkit:

• Operationalisation Handbook: Provides detailed, practical guidance on implementing AI risk management frameworks, organised into four sections aligned with MAS’ proposed AI Risk Management Guidelines (AIRG):
• Scope and Oversight – AI governance framework and roles and responsibilities
• AI Risk Management – AI inventory and risk materiality assessment
• AI Lifecycle Management – controls across the full AI lifecycle; and
• Enablers – organisational capabilities, infrastructure and resources).
• Industry Case Studies: A supplement featuring a compilation of AI case studies documenting the experiences and lessons learned from financial institutions, offering insights into challenges, approaches and risk management practices when using AI in different organisational contexts.
• BuildFin.ai Workgroup: MAS will establish an AI risk management workgroup under the BuildFin.ai initiative to develop implementation resources, facilitate knowledge sharing and build capabilities and frameworks for managing risks from newer AI technologies, such as agentic AI.
• Living Document: The Operationalisation Handbook will be periodically updated as AI use in the industry matures, and it will reflect MAS’ supervisory expectations.

Status: The toolkit is now publicly available. MAS is currently reviewing responses to the earlier public consultation on the proposed AIRG, with final guidelines expected in due course.

3.2 Cybersecurity Service Provider Licensing Framework

On 13 February 2026, the Cyber Security Agency of Singapore (CSA) published its Closing Note to the public consultation on proposed changes to the Licensing Framework for Cybersecurity Service Providers, which was held from 22 September 2025 to 21 October 2025. The updated licence conditions took effect 30 days after publication (approximately mid-March 2026), with the revised framework entering into force on 13 March 2026.

A key objective of the framework update is to raise the baseline of cybersecurity standards nationally, while enhancing clarity on licensing requirements for service providers that perform functions with significant access and potential impact on client systems.

The changes aim to reduce regulatory friction through extended licence validity and simplified notification obligations, striking a balance between robust oversight and administrative efficiency.

The Cybersecurity Service Provider Licensing Framework, established under the Cybersecurity Act 2018, applies to penetration testing and managed security operations centre (MSOC) monitoring services. In February 2026, CSA updated the framework:

• Licence validity extended from 2 to 5 years
• Cyber Trust Mark (CTM) Promoter (Tier 3) certification is now mandatory for all licensees by 31 December 2026
• DPTM certification is no longer required; notification obligations extended to 30 days for key changes, with non material changes no longer reportable; and
• Updated conditions took effect from 16 March 2026.

3.3 Institutional Adoption of Stablecoins

As MAS finalises its stablecoin regulatory framework, the market is shifting decisively from retail speculation to institutional adoption. Concurrently, MAS launched Project BLOOM (Borderless, Liquid, Open, Online, Multi-currency) to extend settlement capabilities using tokenised bank liabilities and regulated stablecoins, while Project Guardian is transitioning from experimental pilots to institutional grade deployment via the Guardian Wholesale Network.

A central objective of the regulatory framework is to establish Singapore as the global leader in regulated, institution grade stablecoin infrastructure by imposing bank like requirements on issuers, including full reserve backing, redemption mandates and robust risk management controls. Project BLOOM and Project Guardian aim to bridge tokenised money with traditional financial infrastructure, creating a hybrid system where stablecoins extend, rather than replace, existing payment rails, enabling 24/7 programmable settlement for cross border transactions, trade finance and capital markets.

MAS requires stablecoin issuers to maintain full reserve backing with high-quality liquid assets held in segregated accounts at top-tier banks, guarantee timely redemption and undergo regular audits. Issuers must obtain an MPI licence with prescribed base capital requirements. Project BLOOM tests institutional use cases, while Project Guardian’s Wholesale Network enables asset tokenisation and cross border atomic settlement. The Global Layer 1 (GL1) Initiative fosters interoperability in the stablecoin market.