Hong Kong's Securities and Futures Commission (SFC) has acknowledged that its closed-loop regulatory approach has led to fragmented liquidity and a disconnect from global markets. Speaking at the Finternet 2025 Asia Digital Finance Summit on November 4, the SFC's Director of Intermediaries and Head of Fintech noted that since 2018, the SFC has been a pioneer in digital asset regulation, adopting a cautious strategy centered around licensed virtual asset platforms. This approach required brokers to collaborate and authorized funds to trade and custody assets through these platforms. However, this closed ecosystem has resulted in liquidity fragmentation, limiting Hong Kong's integration with global financial markets.