Blockchain & Crypto-Assets 2026 Comparisons

Over the past 12 months, the blockchain ecosystem in Hong Kong has shifted decisively from retail cryptocurrency trading towards institutional-grade infrastructure. The jurisdiction now leads in real-world asset (RWA) tokenisation – encompassing money market funds, green bonds and commercial real estate – while integrating distributed ledger technology (DLT) deeply into interbank and capital market frameworks. Key drivers, per the March 2025 research paper of the Hong Kong Monetary Authority (HKMA), “Distributed Ledger Technology in the Financial Sector: A Study on the Opportunities and Challenges”, are programmability and transparency. On-chain representation of traditional assets delivers faster settlement, fractional liquidity and reduced counterparty risk.

The HKMA study specifically notes practical applications such as experimental tokenised deposit solutions for 24/7 fund transfers and deep-tier supply chain financing via stablecoin-based conditional payments. Beyond finance, permissioned DLT networks are now deployed in supply chain logistics and green energy infrastructure to track the real-time operational performance of infrastructure, such as electric vehicle charging stations.

Over the next 12 months, several critical legislative and regulatory issues are poised to impact the use of blockchain. The most significant is the sweeping expansion of the regulatory perimeter under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615) (AMLO). Following the publication of the “Consultation Conclusions on the Legislative Proposal to Regulate Virtual Asset Advisory Service Providers and Virtual Asset Management Service Providers” on 26 May 2026, comprehensive draft legislation is being introduced to the Legislative Council in 2026.

This legislation will establish formal, mandatory licensing regimes for over-the-counter (OTC) virtual asset (VA) dealing, custody, advisory and management services, effectively bringing the entire digital asset value chain under the direct supervision of the Securities and Futures Commission (SFC). Additionally, the impending implementation of the Crypto-Asset Reporting Framework (CARF) of the Organisation for Economic Co-operation and Development (OECD) in 2026 will mandate exhaustive transaction-level tax reporting for service providers, significantly increasing compliance burdens.

The interaction between blockchain business and existing intellectual property (IP) laws has become increasingly harmonised, driven by proactive governmental policy. In his 2025 Policy Address, the Chief Executive unveiled strategic measures to transform Hong Kong into a premier regional IP trading hub, central to which is the IP financing sandbox (see 1.1.2 Regulatory Sandbox). Within the blockchain sector, this facilitates the on-chain tokenisation of IP rights and the embedding of complex licensing logic directly into smart contracts.

Hong Kong operates multiple, highly sophisticated regulatory sandboxes specifically geared towards blockchain-based projects, reflecting a co-ordinated and progressive effort among its primary financial regulators to foster innovation without compromising systemic stability.

SFC Regulatory Sandbox

Launched 19 September 2017, to provide a confined regulatory environment, the SFC expects virtual asset trading platform (VATP) operators to enter this Sandbox and be closely monitored before advanced financial technology is deployed on a fuller scale. The regulator explicitly notes that the Sandbox does not serve as a means to circumvent applicable laws or compromise investor protection requirements.

The HKMA Fintech Supervisory Sandbox (FSS)

Originally launched in September 2016, this environment allows authorised banking institutions and their partnering technology firms to conduct pilot trials of blockchain initiatives with a limited number of participating customers, operating under adapted supervisory requirements. Over the years, the FSS has undergone significant upgrades to expand its utility.

Most recently, the FSS 3.1 Pilot (launched in October 2022 and expanded in November 2024 in collaboration with Cyberport) offers subsidies for projects addressing specific banking industry pain points such as central bank digital currency and interbank account data sharing. As of the end of March 2026, 388 fintech initiatives have been allowed pilot trials within the FSS.

The HKMA Stablecoin Issuer Sandbox

Launched on 12 March 2024, this specialised Sandbox facilitates two-way communication between the central bank of Hong Kong and prospective stablecoin issuers regarding proposed regulatory requirements and operational plans. On 10 April 2026, the HKMA granted the jurisdiction’s first historic stablecoin issuer licences to Sandbox participants Anchorpoint Financial and HSBC.

Project Ensemble Sandbox

Co-led by the HKMA and the SFC, this ambitious initiative is designed to build and scale a tokenisation market in Hong Kong, testing the full product cycle from on-chain primary issuance to secondary market trading and hypothecation. In November 2025, the initiative advanced into the Ensemble pilot phase. This phase facilitates the interbank settlement of tokenised deposits and RWAs directly via the local real-time gross settlement (RTGS) system, designed to significantly reduce the settlement delays and counterparty risks inherent in the legacy banking infrastructure.

IP Financing Sandbox

Officially launched on 22 December 2025 by the HKMA in collaboration with the Commerce and Economic Development Bureau (CEDB), this Sandbox specifically targets the technology sector, creating a collaborative, risk-controlled environment that allows innovative enterprises to leverage their intangible IP assets for credit financing, such as patents and copyrights.

The Generative Artificial Intelligence (GenA.I.) Sandbox

Originally launched by the HKMA in collaboration with Cyberport on 13 August 2024 for the banking sector, this Sandbox provided a risk-controlled environment for authorised institutions to test GenA.I. use cases, particularly focusing on risk management, anti-fraud and customer experience. Building on early successes, the initiative was significantly expanded on 5 March 2026, into the “GenA.I. Sandbox++” co-led by the HKMA, the SFC, the IA and the Mandatory Provident Fund Schemes Authority to cover more sectors.

Participants receive targeted supervisory guidance and complimentary access to graphics processing unit (GPU) computing resources at Cyberport’s AI Supercomputing Centre to accelerate responsible AI adoption, including exploring strategies to automate quality and risk checks.

The general attitude of the government and regulatory authorities towards industries based on blockchain is highly encouraging of institutional, enterprise and sustainable use cases, while simultaneously enforcing zero-tolerance policies against fraud, market manipulation and money laundering risks. The administration employs a dual-policy approach. The SFC’s ASPIRe framework (Access, Safeguards, Products, Infrastructure and Relationships), kicking off on 19 February 2025, prioritises compliance, market integrity and the bridging of traditional finance with blockchain infrastructure.

Concurrently, the “LEAP” framework of the Financial Services and the Treasury Bureau (FSTB), introduced in the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong on 26 June 2025, focuses on streamlining legal structures, expanding tokenised products and embedding the Web3 ecosystem into the real economy. The issuance of tokenised traditional assets, enterprise DLT deployment and regulated stablecoin issuance are heavily encouraged. Conversely, unregulated initial coin offerings (ICOs), algorithmic stablecoins marketed to retail investors and the distribution of complex, highly leveraged derivatives to non-professional investors are strictly prohibited.

When blockchain technology is utilised independently of crypto-assets – eg, for enterprise data management, internal bank reconciliation or supply chain tracking – it is regulated under standard technology, outsourcing and data protection frameworks rather than specialised financial legislation. The HKMA provides specific guidance to authorised institutions regarding the use of DLT and cloud computing. Regulated firms outsourcing critical functions to blockchain technology-enabled solutions must ensure sufficient emphasis on cyber risk within their governance frameworks. They must holistically identify and assess vulnerabilities and maintain proper contractual agreements that allow for regular audits, penetration testing and effectiveness evaluations throughout the entire third-party management life cycle.

Data privacy presents a distinct challenge. Blockchain immutability conflicts with the data minimisation principle and the “right to be forgotten” of the Personal Data (Privacy) Ordinance (Chapter 486). The Office of the Privacy Commissioner for Personal Data and HKMA therefore prohibit storing personal data directly on-chain. The recommended bifurcated architecture stores cryptographic hashes on the ledger while keeping substantive data in off-chain databases, preserving integrity and auditability while enabling deletion. Separately, the Protection of Critical Infrastructures (Computer Systems) Ordinance (Chapter 653), effective 1 January 2026, mandates cybersecurity governance and incident reporting for designated operators of blockchain infrastructure.

Smart contracts are capable of being enforced in Hong Kong, provided they satisfy the fundamental tenets of traditional common law contract formation: offer, acceptance, valid consideration and the mutual intention to create legal relations. However, jurisprudence and regulatory guidance, including input from the technology committee of the Law Society of Hong Kong, indicate that smart contracts are better characterised as automated execution mechanisms. Smart code often lacks the linguistic nuance required to adequately capture complex representations, warranties, force majeure conditions and the full spectrum of equitable duties required in sophisticated commercial transactions.

To ensure enforceability and mitigate operational legal risks, the HKMA’s second DLT White Paper (2017) and the March 2025 research paper both recommend that smart contracts be tethered to conventional legal scaffolding. Legal rights typically emerge from separate, legally binding master agreements or terms of service that govern the overarching relationship between the parties. Under the Electronic Transactions Ordinance (Chapter 553), electronic signatures and cryptographic authentications used to execute these contracts hold the exact same validity as traditional wet-ink signatures, provided that the process is demonstrably reliable and the recipient consents to the digital format.

As of the date of publication (11 June 2026), there are no statutory self-regulatory organisations (SROs) endowed with formal enforcement powers representing the blockchain industry in Hong Kong. Formal regulatory and disciplinary authority remains exclusively vested in the SFC and the HKMA.

However, the industry is robustly represented by highly influential trade associations and advocacy groups, most notably the Fintech Association of Hong Kong and the Bitcoin Association of Hong Kong. These organisations serve critical quasi-regulatory and developmental roles. They actively aggregate industry data, formulate consolidated responses to government consultation papers and promote best practices in areas ranging from smart contract auditing to AML compliance. They function as vital conduits between market participants and policymakers, ensuring that the legislative trajectory remains commercially viable and internationally competitive.

Crypto-assets are recognised as a form of property under Hong Kong law. This characterisation firmly aligns the jurisdiction’s jurisprudence with other major global common law centres. The landmark decision by the Court of First Instance in Re Gatecoin Limited (in liquidation) [2023] HKCFI 914 established that cryptocurrencies fall within the legal definition of “property” and are therefore fully capable of forming the subject matter of a trust. This pivotal ruling facilitates the valid transfer, bequest and conformity of digital assets to standard corporate insolvency recovery mechanisms. Building upon this, the further decision in Re Gatecoin Limited (in liquidation) [2025] HKCFI 493 clarified the distribution of recovered crypto-assets and confirmed the return of constructive trust assets to beneficiaries, emphasising the role of contractual terms in determining insolvency priority.

As crypto-assets are recognised as property, the approach to enforcing property rights over them involves adapting established equitable and common law remedies directly to digital frameworks. Courts regularly grant interlocutory proprietary injunctions and freezing orders over cryptocurrencies. In a groundbreaking technological and judicial development, the High Court in Worldwide A-Plus Investments Ltd v A-Plus Meta Technology Ltd [HCA 2417/2024] granted leave to mint first blockchain-native tokenised injunction order globally. The court deployed a freezing order directly onto the Tron blockchain to restrict suspect wallets. This demonstrates that while the fundamental property rights are identical to those of tangible assets, the enforcement mechanisms are evolving to leverage the unique transparency and programmable nature of the technology itself.

Transfer in Ownership

The transfer in ownership of crypto-assets is determined primarily by the functional control evidenced by the exclusive possession of a private cryptographic key associated with that specific asset. The execution of a digital signature authorising a transfer, followed by the network’s verification and recording of that transaction on the distributed ledger, updates the definitive legal ownership status.

Custodial Standards

To support the influx of institutional digital assets and the impending launch of HKD stablecoins, the HKMA issued the “Updated Guidance on Expected Standards on Provision of Custodial Services for Digital Assets by Authorized Institutions” (AIs) on 27 May 2026. The standards demand reinforced technical resilience to prevent misappropriation or insolvency contagion. 

AIs holding client VAs must store 98% of the client digital assets in cold storage, entirely disconnected from the internet, unless alternative arrangements are exhaustively justified. Cold wallet implementations are explicitly prohibited from incorporating smart contracts on public blockchains, thereby eliminating potential on-chain attack vectors.

Furthermore, the HKMA mandates the elimination of any “single point of failure” in cryptographic key management. AIs must employ key sharding or multi-party computation technology to split private keys among multiple authorised personnel, ensuring no single individual possesses full access. Hardware security modules generating these keys must be vetted, and the devices must be housed in secure, air-gapped vaults strictly within Hong Kong, with offline disaster recovery backups subjected to identical physical security constraints. For Relevant stablecoins, AIs may delegate custody functions directly to the issuer itself, provided it segregates the assets completely from its proprietary funds.

On a separate note, in “Consultation Conclusions on the Legislative Proposal to Regulate Virtual Asset Advisory Service Providers and Virtual Asset Management Service Providers” (issued on 26 May 2026), the SFC, realising the commercial realities, concluded that private funds will retain the flexibility to appoint qualified custodians globally, maintaining regulatory parity with traditional asset management. Furthermore, VA management service providers are permitted to employ “self-custody” on a limited basis for specific tokens where no qualified custodian exists, provided they implement SFC-prescribed safeguarding mechanisms and have the higher financial resources required for holding client assets.

Collateral Arrangements and VA Financing

There are specific, complex legal and regulatory issues relating to the use of digital assets in collateral arrangements. Establishing a perfected security interest is challenging due to the intangible nature of the assets and the technical nuances of blockchain finality. Furthermore, inherent price volatility requires highly sophisticated valuation methodologies. To integrate margin trading safely into the regulated sector, the SFC issued a seminal circular on 11 February 2026 (“Circular on licensed corporations providing VA dealing services to offer financing for VA dealing and access to shared order book, and to safeguard client VAs relating to withdrawals”), further supplemented by the HKMA’s “Guidance on Offering of Financing for Virtual Asset Dealing, Shared Order Book, and Client Virtual Asset Withdrawals” issued on 27 May 2026, permitting registered institutions (RIs) and licensed VA brokers operating under omnibus accounts to offer VA margin financing to their securities margin clients. Financing is based on the client’s financial capability and collateral (securities and/or VA). All existing securities margin financing requirements apply and are extended to VA financing.

To mitigate volatility and systemic risk, this framework mandates that only the most highly liquid digital assets, currently restricted to Bitcoin, Ethereum and specified stablecoins issued by HKMA-licensed stablecoin issuers (relevant stablecoins), are eligible as collateral, with a stringent minimum 60% valuation haircut applicable to Bitcoin and Ethereum.

Brokers must implement real-time collateral monitoring systems and are strictly prohibited from engaging in the rehypothecation of client VA collateral, ensuring assets remain fully available for redemption. With regard to capital treatment, loans solely collateralised by VAs must be treated as clean loans because VA collateral is not recognised under the Banking (Capital) Rules for risk-based capital calculations. RIs must suspend any further advances and halt further VA purchases if the outstanding margin loan balance exceeds the market value of the underlying collateral.

There are no statutory restrictions prohibiting firms that provide crypto-asset services from partnering with general banking and payment providers in Hong Kong. The HKMA has consistently issued explicit guidance mandating that authorised institutions adopt a risk-based approach rather than enforcing wholesale de-risking policies that categorically deny services to the digital asset sector.

However, obstacles and commercial friction persist regarding access to banking services. These challenges stem predominantly from the exhaustive enhanced due diligence (EDD) required by traditional financial institutions to satisfy internal AML/CFT obligations. Banks must forensically assess the crypto firm’s transaction monitoring systems, source of wealth verifications, blockchain analytics tools and regulatory licensing status.

Protracted delays in account opening are common as banks conduct these complex risk assessments. Nevertheless, the rollout of comprehensive licensing regimes has improved institutional banking access for fully compliant, licensed operators.

ESG and sustainable finance requirements are increasingly applicable to digital assets and the firms that operate them in Hong Kong. The Hong Kong Exchanges and Clearing has implemented sweeping new climate-related reporting requirements based on the International Sustainability Standards Board IFRS S2 standards. Starting 1 January 2026, all large-cap listed issuers are subject to mandatory disclosure requirements regarding climate-related risks and opportunities affecting their business models.

Crucially, all listed issuers are required to disclose their Scope 1 and Scope 2 greenhouse gas emissions on a mandatory basis for financial years commencing on or after 1 January 2025. For publicly listed digital asset firms, or traditional financial institutions with significant proprietary digital asset mining or transaction validation operations, these rules necessitate rigorous reporting on the environmental impact and energy consumption profiles of the specific blockchain consensus mechanisms (such as proof of work) utilised by the assets they hold or process.

Additionally, SFC-authorised investment funds with a stated ESG focus that maintain exposure to VAs must strictly comply with the SFC’s “Circular on SFC-authorised funds with exposure to virtual assets” (updated 27 May 2026) and “Circular to management companies of SFC-authorized unit trusts and mutual funds - ESG funds” (issued on 29 June 2021). These funds are required to demonstrate precisely how the incorporation of digital assets aligns with their stated sustainability criteria and are subject to continuous periodic reporting obligations to rigorously prevent greenwashing.

The tax regime in Hong Kong is undergoing a historic, structural update to comprehensively address the proliferation of digital assets. Historically, the Inland Revenue Department (IRD) has relied on the territorial tax principle outlined in Departmental Interpretation and Practice Notes No 39 (DIPN 39), issued 27 March 2020. This framework determines taxation based on the “badges of trade”, assessing whether the assets are held for long-term investment (generating capital gains, which are generally non-taxable in Hong Kong) or active trading (subjecting the gains to profits tax).

However, the most significant update is the implementation of the OECD’s CARF alongside sweeping amendments to the Common Reporting Standard (CRS 2.0). Following a public consultation (launched by Consultation Paper on the Implementation of the Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard in Hong Kong, December 2025) that concluded in February 2026, the government is completing the necessary legislative amendments to the Inland Revenue Ordinance (Chapter 112) within the 2026 calendar year.

This framework compels reporting crypto-asset service providers, including brokers, exchanges and operators of crypto automated teller machines (ATMs), to conduct rigorous due diligence, register on the central CARF Portal, and execute transaction-level reporting on the exchanges and transfers of covered crypto-assets. The rules will become active for data collection starting 1 January 2027, with the IRD commencing international information exchanges in 2028.

The most significant tax uncertainties currently revolve around the granular application of the new CARF rules to highly complex, decentralised protocols, and the tax treatment of novel tokenomics structures such as staking yields, airdrops and decentralised finance (DeFi) liquidity mining, which are not explicitly detailed in legacy guidance like DIPN 39. Concurrently, the 2026–27 Budget introduced proposals to formally expand the scope of tax concessions for investment funds and family offices to classify digital assets as qualifying investments, a strategic move aimed at attracting sophisticated wealth management capital to the jurisdiction.

Hong Kong approaches the winding-up and insolvency of blockchain-based businesses through a sophisticated combination of traditional corporate insolvency law and highly specialised resolution regimes for entities posing macroeconomic risks. Under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32) (CWUMPO), crypto-asset firms are liquidated similarly to regular corporations. Following the binding precedent set in Re Gatecoin Limited (in liquidation) [2025] HKCFI 493, customer VAs held on trust by an exchange do not form part of the general estate available to unsecured creditors, provided the terms of service explicitly establish a valid, legally recognisable trust structure. However, if the assets are commingled or the terms grant the exchange ownership in its own right, users are relegated to the status of unsecured creditors facing significant losses. To protect clients from this outcome, SFC-licensed VATPs are mandated to implement strict asset segregation, utilise cold storage heavily and maintain specific liquid capital buffers.

For digital asset firms carrying systemic macroeconomic weight, Hong Kong deploys a bespoke resolution regime governed by the Financial Institutions (Resolution) Ordinance (Chapter 628) (FIRO). With the full enactment of the Stablecoins Ordinance (Chapter 656) from August 2025, the HKMA is explicitly empowered to designate specific FRS issuers as systemic entities based on aggregate transaction volume and integration into the domestic payment ecosystem.

If a systemic stablecoin issuer faces non-viability or catastrophic failure, the HKMA can legally bypass standard, protracted court-led liquidation procedures. The central bank can invoke FIRO to assume direct operational control of the entity, enforce bail-in mechanisms, execute wind-down plans or orchestrate the compulsory transfer of reserve assets to a government-managed bridge institution. This extraordinary power ensures the continuity of critical financial infrastructure and actively prevents contagion.

As detailed in 1.1.5 Industry and Trade Bodies, there are no statutory SROs representing the crypto-asset industry. The sector relies heavily on prominent trade associations, such as the Fintech Association of Hong Kong and the Bitcoin Association of Hong Kong.

Hong Kong law enforces a rigid and statutory distinction between fiat-backed stablecoins and algorithmic stablecoins. FRS are defined as digital representations of value that purport to maintain a stable value with reference to one or more official fiat currencies. Algorithmic stablecoins utilise complex smart contract algorithms and incentive mechanisms to maintain their peg through dynamic expansion and contraction of token supply, without relying on fully backed physical reserves.

Due to their inherent susceptibility to death spirals and bank-run risks, algorithmic stablecoins do not qualify for issuance under the licensing regime, effectively excluding them from the regulated local payment ecosystem.

Fiat-backed stablecoins are heavily regulated in Hong Kong. Rather than retrofitting stablecoins into the pre-existing Payment Systems and Stored Value Facilities Ordinance, the government enacted a bespoke, purpose-built framework, the Stablecoins Ordinance, which became fully operational on 1 August 2025.

This bespoke framework establishes a comprehensive licensing regime administered exclusively by the HKMA. It captures any person issuing an FRS in Hong Kong, issuing an HKD-referenced stablecoin anywhere globally or actively marketing an FRS to the Hong Kong public.

The framework is significantly more stringent than legacy payment regulations, as it imposes rigorous capital requirements, continuous reporting obligations and strict limits on the types of institutions permitted to distribute the assets. Legally, only permitted offerors, namely licensed stablecoin issuers, authorised banking institutions, SFC-licensed VATPs and licensed securities brokers, are allowed to offer specified stablecoins to the retail public in Hong Kong.

Recognising that FRS issued by HKMA-licensed entities pose fundamentally different risk profiles compared to speculative crypto-assets, the SFC issued “Circular on provision of Relevant Stablecoin service by virtual asset trading platforms and licensed corporations” on 27 May 2026, carving out a highly preferential regulatory pathway for these assets compared to other VAs. The HKMA issued a circular on “Virtual asset-related activities in relation to relevant stablecoins issued by licensed stablecoin issuers” on the very same day to back the SFC’s position. While VAs, classified as complex products requiring exhaustive risk warnings, must meet a 12-month track record before VATP listing, undergo mandatory client knowledge assessments, and satisfy liquidity and dual index-inclusion requirements, relevant stablecoins are treated as non-complex products subject only to standard warning statements and are exempt from these obligations.

An operational shortcut is also created towards the licensing regime. Relevant stablecoin-only dealing services are not restricted to RIs registered for Type 1 activity, nor limited to Type 1 clients. An RI managing portfolios that include only relevant stablecoins (and no other VAs) does not need Type 9 registration, even if it would otherwise require one. RIs providing relevant stablecoin-only advisory services are also not restricted by the narrow Type 1 and Type 4 client scope.

While heavily streamlined, intermediaries providing advisory or dealing services in relevant stablecoins must still fulfil core suitability obligations, particularly considering the client’s specific objective or “use case” for the stablecoin, and must transparently disclose material information regarding the stabilisation mechanism and redemption arrangements.

Targeting to significantly mitigate the risk of insolvency and systemic runs, the HKMA imposes exacting requirements on backing assets for fiat-backed stablecoins. Licensed issuers must maintain eligible, highly liquid reserve assets whose value equals or exceeds the par value of the stablecoins in circulation at all times. The composition of these reserves is strictly limited to high-quality assets, predominantly fiat currency deposits and short-term sovereign debt denominated in the exact referenced currency.

These backing assets must be fully segregated from the issuer’s proprietary funds and held in bankruptcy-remote structures. The HKMA strongly mandates that a licensed bank in Hong Kong acts as the primary custodian of these reserve assets to ensure immediate accessibility. Furthermore, to ensure the stablecoin functions strictly as a medium of exchange rather than a yield-bearing collective investment scheme, Section 15 of Schedule 2 to the Stablecoins Ordinance heavily restricts the ability of the issuer to pay interest or yield derived from the reserve assets directly to the stablecoin holders.

Stablecoin arrangements that achieve massive public adoption may pose unique macroeconomic threats to the jurisdiction. To address this, the HKMA is granted extraordinary statutory power under the Stablecoins Ordinance to designate specific stablecoin networks as carrying “systemic risk”. This designation is based on factors such as aggregate transaction volume, the number of users and the stablecoin’s level of integration into the broader domestic payment and settlement ecosystem.

Systemic stablecoin issuers are subject to thorough regulatory oversight, most notably exemplified by their inclusion under the FIRO (Chapter 628). By bringing systemic stablecoins under the FIRO, the HKMA ensures that if a major issuer faces catastrophic failure, the central bank can legally bypass traditional, protracted insolvency proceedings. The HKMA can assume direct operational control of the entity, enforce wind-down plans, execute bail-in mechanisms or execute stabilisation options – eg, transferring the reserve assets and critical operations to a government-managed bridge institution – to immediately halt financial contagion and preserve the stability of broader Hong Kong financial markets.