Hong Kong’s Push for Crypto Asset Trust Management

As the global financial landscape evolves, the influence of the crypto asset market is becoming increasingly significant. Hong Kong, as an international financial hub, is capturing this trend by upgrading its regulatory measures to foster the development of the crypto asset market. The rise of crypto asset trust management marks a new era of financial innovation, offering opportunities for investors and financial institutions while diversifying and internationalizing Hong Kong’s financial market.

ASPIRe Regulatory Roadmap for the Virtual Asset Market

On February 19, 2025, the Hong Kong Securities and Futures Commission (SFC) released the ASPIRe (Asset and Securities Platform for Innovation and Regulation) roadmap, outlining a clearer regulatory framework for the virtual asset market. This roadmap consists of five core pillars: market access, security safeguards, product development, infrastructure, and industry collaboration, providing a long-term direction for regulation.

Implications for Family Trusts and Family Offices

The ASPIRe roadmap has a positive impact on family trusts and family offices:

• Legal and regulatory support for crypto asset trusts enables their inclusion in wealth structures.
• Enhanced asset compliance ensures better investor protection.
• Family trusts can now hold and invest in crypto assets legally, expanding their investment channels and business scope.

Hong Kong is positioning itself as a global hub for crypto asset trust management and wealth succession, attracting ultra-high-net-worth families and institutions worldwide.

Legal Precedent: The Gatecoin Case and Crypto Asset Trusts

A month before the ASPIRe roadmap was released, the Gatecoin case ruling provided legal assurance for crypto asset trusts, laying the foundation for digital asset management laws.

Background of the Gatecoin Case

Founded in 2015, Gatecoin was a Hong Kong-based cryptocurrency exchange offering trading for over 45 cryptocurrencies. In March 2019, the company entered liquidation due to financial issues, appointing a liquidator. By October 2022, the liquidator had recovered over HKD 140 million worth of crypto assets and sought court guidance on their classification, distribution, and whether they were held in trust for customers or considered company assets.

Key Rulings and Implications

• Crypto assets can be held as trust property and are entitled to traditional trust asset legal protections.
• Client assets held in trust must be returned in their original form where feasible; otherwise, they may be liquidated for cash.
• Trust agreements must be clearly defined to prevent crypto assets from being considered corporate assets.

Impact on Family Offices

• Family offices can now establish fully compliant crypto asset trusts.
• Trust agreements need to be more precise to ensure asset separation.
• Custodial arrangements are critical, requiring secure storage solutions like multi-signature wallets or cold storage for enhanced security and compliance.

The New Financial Momentum of Crypto Asset Trust Management

The regulatory upgrade in Hong Kong has injected fresh vitality into the financial landscape in several ways:

1. Legal & Policy Framework: Strengthened Compliance

The Hong Kong High Court ruling in the Gatecoin case, coupled with the ASPIRe roadmap, provides a strong legal foundation and clear policy guidance for crypto asset trust management. This shift from regulatory uncertainty to compliance and legalization boosts confidence among financial institutions and investors while laying the groundwork for long-term industry growth.

2. Global Capital Attraction: A New Choice for High-Net-Worth Individuals

As an international financial hub, Hong Kong already holds strong appeal for global investors. Its trust system offers asset protection, privacy, and tax advantages. Now, with crypto asset trusts becoming compliant, ultra-high-net-worth individuals can diversify their portfolios and strategically allocate assets through Hong Kong’s trust institutions.

3. Financial Product Innovation: Expanding Investment Options

The development of crypto asset trusts is driving financial innovation, leading to the emergence of investment products such as virtual asset ETFs and tokenized financial products. Investors now have more diversified options, enabling them to combine traditional financial assets with crypto investments, optimize portfolios, reduce risks, and maximize returns.

4. Integration of Traditional & Crypto Finance

Regulatory upgrades are encouraging collaboration between traditional financial institutions and the crypto asset sector. Banks and asset managers are integrating crypto asset trust services, providing custodial solutions and participating in the issuance of virtual asset ETFs. This bridges the gap between conventional finance and digital assets, fostering a more dynamic financial ecosystem.

How Can Family Offices Integrate Crypto Asset Trusts?

As global virtual asset regulations become clearer, family offices must consider incorporating crypto assets into their trust structures for wealth protection and succession planning.

Choosing the Right Trust Structure

Hong Kong, with the ASPIRe roadmap, is becoming a leading hub for crypto asset trusts due to its regulatory clarity, financial market sophistication, and strategic location. Other jurisdictions, such as the Cayman Islands and British Virgin Islands (BVI), remain popular for tax optimization, privacy protection, and flexible trust structures.

Key Considerations for Family Offices

1. Selecting the Right Trustee & Custodian

   • Trustees must have expertise in crypto asset management and a deep understanding of market risks.
   • Custodians must be compliant and utilize secure storage methods like multi-signature wallets or cold storage to prevent loss or misuse of assets.

2. Ensuring Regulatory Compliance

   • Trust structures must align with the Hong Kong SFC’s regulatory framework and global compliance standards.

3. Optimizing Tax Planning & Investment Strategies

   • Family trusts can invest in virtual asset ETFs for portfolio diversification.
   • Exploring DeFi (Decentralized Finance) investments within a trust structure could be a new frontier.
   • Leveraging trust structures to optimize tax planning and reduce tax burdens while preserving and growing wealth.

Challenges & Opportunities in Crypto Asset Trust Management

Despite the growth potential, crypto asset trust management in Hong Kong still faces regulatory, compliance, and operational challenges:

• Regulatory Variability: Different countries have varying approaches to crypto asset regulation, making cross-border compliance complex.
• High Compliance Costs: Institutions need significant resources to establish compliance frameworks and risk management systems.
• Technological & Business Model Innovation:
  • Investing in secure storage technologies to enhance asset safety and transparency.
  • Developing hybrid financial products that combine crypto assets with traditional finance.
  • Attracting traditional financial institutions into the crypto asset space, fostering market competition and innovation.

Conclusion: A New Era for Hong Kong’s Crypto Asset Trust Industry

Family trusts and family offices must adapt to the changing landscape of crypto asset management. Staying ahead of regulatory developments, optimizing trust structures, and leveraging innovative investment strategies will be key to success.

With its regulatory enhancements, Hong Kong is well-positioned to become a global leader in crypto asset financial services. As regulations mature and market players evolve, Hong Kong could emerge as a dominant force in the global crypto asset trust industry.

Investors and financial institutions should closely monitor this space and seize opportunities as crypto asset trust management in Hong Kong continues to flourish.

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