SFC Greenlights World-First Secondary Trading of Tokenised Funds on Licensed VATPs
Hong Kong's Securities and Futures Commission has approved secondary trading of tokenised money market funds on a licensed virtual asset trading platform, a development it describes as a global first. Trading on a 24/7 basis began on 26 October 2026, covering two existing SFC-authorised tokenised money market funds. For accounting firms, auditors, and CFOs with exposure to Hong Kong's digital asset market, this is not a future-state scenario; it is live infrastructure that requires immediate attention to booking policies, settlement workflows, and disclosure obligations.
What the SFC Has Actually Approved
The SFC's approval sits within a regulatory framework it introduced in April 2026, specifically designed to pilot secondary trading of SFC-authorised funds on SFC-licensed virtual asset trading platforms (VATPs). The framework builds on the regulator's existing rules for exchange-traded funds and VATPs rather than creating an entirely separate regime, which matters for compliance mapping.
Key parameters of the circular
In the circular accompanying the approval, the SFC set out requirements across four areas: the operation of the trading channel itself, fair pricing obligations, liquidity provision standards, and disclosure requirements. These are not aspirational; they are conditions attached to the live trading activity beginning today.
The initial product scope is deliberately narrow. Only tokenised money market funds authorised by the SFC are included in this first batch. The regulator has stated it will monitor trading activity and consider broadening the product scope over time, taking into account market developments and operational experience. That staged approach is significant: it signals the SFC's intent to expand the framework, but firms should not assume equity or fixed-income tokenised funds are imminent without further regulatory confirmation.
The 24/7 trading dimension
The around-the-clock availability is one of the structurally distinctive features of this approval. Traditional money market funds settle on a T+1 or same-day basis during defined windows. Secondary trading on a VATP removes those windows entirely. Investors can sell tokenised fund units at any hour and, critically, transfer proceeds instantly for other uses. That instant mobility is a feature of the tokenised rails, but it also creates new questions for accounting and treasury teams about cut-off times, intraday exposure, and how to record positions that may change outside of conventional business hours.
Project Ensemble: The Settlement Layer Behind This
The SFC's announcement explicitly references Project Ensemble, a joint initiative between the SFC and the Hong Kong Monetary Authority (HKMA). The SFC has been co-leading tokenisation initiatives for the asset management industry under that project, and the approval of secondary VATP trading is a direct output of that collaboration.
Tokenised deposits as settlement currency
The SFC's statement flags a forward-looking capability: tokenised funds could leverage the tokenised deposit infrastructure developed under Project Ensemble. The interaction between tokenised fund units and tokenised money on digital rails could support more efficient trade settlement and asset mobility. In practical terms, this means settlement of secondary trades in tokenised funds may eventually be conducted in tokenised deposits rather than conventional fiat transfers through traditional correspondent banking. For accounting teams, that introduces a new asset class on both sides of the settlement entry. Understanding tokenised deposit accounting and stablecoin implications is therefore directly relevant to firms operating in this space.
The settlement efficiency argument is real. Instant, programmable settlement eliminates the counterparty exposure that exists during conventional settlement windows. But it also compresses the time available for manual reconciliation and exception handling, which has operational consequences for back-office teams and their crypto bookkeeping software configurations.
Accounting Implications for B2B Practitioners
The live approval creates several immediate accounting questions that firms cannot defer to a future policy cycle.
Classification and measurement of tokenised fund units
A tokenised money market fund unit is, at its core, a unit in an SFC-authorised collective investment scheme represented on a distributed ledger. Under IFRS 9, the classification depends on the contractual cash flow characteristics and the entity's business model. Money market fund units that fail the SPPI test (sole payments of principal and interest) are typically measured at fair value through profit or loss. The tokenised wrapper does not change the underlying instrument's economics, but it does affect how the position is held and transferred, which may influence the business model assessment.
Firms applying IFRS need to document whether they are holding tokenised fund units to collect contractual cash flows, to trade, or both. The 24/7 liquidity characteristic of these instruments, now confirmed by the SFC's approval, strengthens the argument that they function more like trading instruments than hold-to-maturity positions for many institutional holders.
Intraday valuation and cut-off policies
Conventional fund accounting uses a single daily NAV as the pricing reference. Secondary trading on a VATP introduces the possibility of intraday price discovery that may diverge from the official NAV. The SFC's circular addresses fair pricing obligations, but the accounting team still needs a policy on which price to use for period-end reporting: the official NAV, the last traded VATP price, or a mid-price derived from both. This is not a trivial choice; it affects profit and loss figures and, for investment managers, performance reporting.
Digital asset accounting software and system readiness
Most enterprise accounting systems were not built to ingest continuous trading data from a VATP. Digital asset accounting software that can handle blockchain-native transaction feeds, timestamp-accurate position records, and automated reconciliation against on-chain data is no longer optional for firms with live exposure to these instruments. Audit trails need to capture not just trade execution but also the on-chain transfer of tokenised units and any associated tokenised deposit movements.
The broader shift in tokenised market infrastructure is accelerating across multiple jurisdictions, and firms need systems that can adapt. Our coverage of how tokenised market infrastructure is evolving across jurisdictions provides useful context on what peer markets are building.
Compliance and Disclosure Obligations
What the SFC's circular requires from trading participants
The circular covers four operational areas. Trading channel operation requirements address how the VATP must structure access and order execution for tokenised fund units. Fair pricing requirements are intended to prevent the secondary VATP price from drifting materially from the fund's underlying NAV without adequate disclosure. Liquidity provision standards ensure that secondary market depth is maintained, reducing the risk of investors being unable to exit positions. Disclosure requirements apply to fund managers and distributors, covering how they communicate the risks of secondary trading, including the possibility that the VATP price may differ from the subscription/redemption NAV.
For compliance teams, these four areas map directly to existing obligations under the SFC's licensing conditions for VATPs and the Code on Unit Trusts and Mutual Funds. The new circular adds a layer specific to tokenised fund secondary trading; it does not replace those underlying obligations.
AML and investor protection considerations
24/7 trading on a VATP also has AML implications. Unlike conventional fund redemptions, which route through a fund administrator with embedded identity checks, secondary VATP trades settle peer-to-peer on digital rails. VATPs licensed by the SFC are subject to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and the SFC's own AML guidelines. Compliance teams should confirm that their VATP counterparty's onboarding and transaction monitoring controls are adequate for continuous trading volumes, and that their own client-level AML obligations are not inadvertently bypassed by the tokenised transfer mechanism.
What Comes Next
The SFC has been explicit that the initial product scope, tokenised money market funds only, is a starting point. The regulator will monitor trading activity and consider expanding to other fund types based on market experience. Firms that establish robust accounting and compliance frameworks now, for money market fund tokens, will be better positioned to absorb that expansion without a full infrastructure rebuild.
The SFC's Executive Director of Investment Products, Elisa Ng, described the approval as "an important milestone" and a key "building block" for Hong Kong's tokenisation ecosystem, specifically citing the 24/7 trading capability as the structural addition. The regulator's stated intention to continue facilitating "responsible innovation while safeguarding investors" suggests future approvals will follow the same pattern: a narrow initial scope, a monitoring period, and a deliberate broadening based on evidence.
For firms operating across multiple jurisdictions, it is also worth tracking how Hong Kong's framework interacts with tokenisation initiatives elsewhere. Project Ensemble's focus on tokenised deposits as a settlement layer has direct parallels with similar infrastructure projects in other financial centres, and accounting teams will need to manage instruments that may eventually settle across those systems.
Frequently Asked Questions
Does the SFC's approval apply to all types of tokenised funds?
No. The current approval covers only tokenised money market funds that are already SFC-authorised. The SFC has indicated it may broaden the product scope over time, but no timeline or additional asset classes have been confirmed.
How should tokenised money market fund units be classified under IFRS 9?
The tokenised wrapper does not change the underlying instrument. Units in a money market fund typically fail the SPPI test and are measured at fair value through profit or loss under IFRS 9. The continuous trading availability confirmed by this approval strengthens the case for a fair-value-through-P&L classification for most institutional holders, but each firm must document its own business model assessment.
What pricing policy should firms use when the VATP price differs from the fund's NAV?
The SFC's circular imposes fair pricing obligations on trading participants, but it does not prescribe a single accounting price. Firms should establish a documented policy, approved at the appropriate governance level, specifying whether they use the official NAV, the last VATP traded price, or a blended reference. That policy must be applied consistently and disclosed in financial statement notes where material.
Are existing VATP AML obligations sufficient for continuous fund trading?
Licensed VATPs in Hong Kong are already subject to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and SFC AML guidelines. The 24/7 trading model increases transaction volume and the speed of asset transfers, which may strain existing transaction monitoring configurations. Firms should review whether alert thresholds and escalation procedures are calibrated for continuous, higher-frequency activity.
What should firms do immediately in response to this approval?
Three immediate actions stand out. First, review whether existing accounting policies cover tokenised fund units specifically, including cut-off, pricing, and classification. Second, assess whether current crypto bookkeeping software or digital asset accounting software can ingest and reconcile VATP trade data on a continuous basis. Third, confirm with any VATP counterparty that their compliance controls, particularly AML and investor protection disclosures, meet the requirements set out in the SFC's circular.