In a significant move, two key financial regulators in Hong Kong, the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC), have announced their intention to adopt the reporting requirements established by the European Securities and Markets Authority (ESMA) for crypto over-the-counter (OTC) derivatives. This decision, made public on September 26, follows a review of responses to a consultation paper released in March 2024, aiming to align Hong Kong’s OTC reporting framework with global standards.

Stakeholders in Hong Kong have expressed that investments in crypto OTC derivatives cannot be neatly categorized under traditional asset classes such as interest rates, foreign exchange, credit, commodities, and equities. In light of this, some have proposed the use of Digital Token Identifiers (DTI) to distinctly identify crypto-asset underliers for OTC derivatives. In response, the HKMA and SFC acknowledged that ESMA implemented DTI in its reporting requirements in October 2023, establishing it as a key reference for crypto asset service providers in Europe. The Hong Kong regulators plan to adopt a similar framework, emphasizing the necessity of a Unique Product Identifier (UPI) for transaction reporting.

They stated, “Given that the Digital Token Identifier has been included in the data field ‘Underlier ID (OTHER)’ as an allowable value in the upcoming consultation of version 4 of the CDE Technical Guidance, we will accommodate the use of DTI in our reporting requirements.”

The HKMA and SFC will continue to monitor mandates from other jurisdictions and are prepared to adopt comparable frameworks as needed. The new reporting standards in Hong Kong are expected to be implemented by September 29, 2025.

Additionally, Hong Kong has recently achieved a milestone in developing its own central bank digital currency (CBDC), the digital Hong Kong dollar (e-HKD). On September 23, the HKMA announced the launch of the second phase of the e-HKD pilot study, known as Project e-HKD+. This new phase will explore three key themes: the settlement of tokenized assets, programmability, and offline payments, and will operate within its own sandbox environment for approximately one year.