On 2 November 2023, the Securities and Futures Commission (the “SFC“) issued two highly anticipated circulars on tokenisation (i.e. the Circular on intermediaries engaging in tokenised securities-related activities (the “Tokenised Securities Circular“), and the Circular on tokenisation of SFC-authorised investment products (the “Tokenised Investment Products Circular“)). The Tokenised Securities Circular aims to provide conduct-related guidance to intermediaries engaging in tokenised securities-related activities, while the Tokenised Investment Products Circular sets out the requirements and additional safeguards under which the SFC would consider in allowing tokenisation of investment products authorised by the SFC under Part IV of the Securities and Futures Ordinance (Cap. 571) for offering to the public in Hong Kong.

Notably, the Tokenised Securities Circular now allows retail access to the distribution and marketing of “Tokenised Securities”, a concept defined in the circular itself. This represents the SFC’s shift in attitude since its Statement on Security Token Offerings dated 28 March 2019, where security tokens were previously considered as “complex products” requiring additional investment protection measures which should only be offered to professional investors.

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