In late December 2025, DL Securities (Hong Kong) Limited, a 70 percent-owned subsidiary of DL Holdings Group (1709.HK), received conditional approval from the Hong Kong Securities and Futures Commission (SFC) to upgrade its Type 1 securities dealing licence to include virtual asset trading services. This milestone places DL Securities among a small cohort of licensed intermediaries able to operate across traditional securities and regulated digital assets under Hong Kong’s evolving virtual asset regime. Market reaction was immediate: DL Holdings’ shares opened 14.5 percent higher and briefly surged 44.6 percent to HKD 2.69, signalling investor confidence in a compliance-first digital asset strategy.
More importantly, the approval highlights how Hong Kong tokenized securities regulation is evolving—bringing tokenization fully within existing securities laws. This blog examines what DL Holdings’ approval means for building SFC compliant tokenized securities platforms, including regulatory expectations, platform design choices, and compliance requirements. It also outlines practical lessons for firms focused on RWA tokenization platform development in Hong Kong’s institutional market.
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Key Challenges in Building Tokenized Securities Platforms
Before DL Securities received conditional approval, firms building tokenized securities or RWA platforms in Hong Kong faced material regulatory and operational friction. While Hong Kong signalled openness to digital assets, execution within a fully regulated framework remained difficult.
Common challenges included:
- Licensing uncertainty – Firms were often unclear whether existing securities licences covered tokenized instruments, creating hesitation around product launches and capital commitments.
- Limited integration with traditional securities markets – Tokenized assets frequently sat outside established brokerage, clearing, and custody workflows, making them difficult for institutional investors to access.
- Unclear secondary trading pathways – Many platforms lacked clarity on how regulated secondary trading of tokenized securities could be executed without breaching SFC rules.
- Investor trust and adoption barriers – Without clear regulatory alignment, tokenized securities struggled to gain traction with professional and institutional investors.
- Operational fragmentation – Issuance, custody, and trading were often handled by separate or offshore entities, increasing compliance risk and operational complexity.
What DL Holdings’ SFC Approval Signals for the Tokenized Securities Market
DL Securities’ conditional approval by the Securities and Futures Commission materially shifts the landscape for tokenized securities platforms in Hong Kong by providing clear regulatory direction.
What this approval enables:
- A defined licensing pathway – Tokenized securities and regulated digital asset trading can be offered under an extended Type 1 licence, removing ambiguity around regulatory scope.
- Seamless integration with securities infrastructure – Tokenized assets can now be distributed and traded through licensed intermediaries operating under familiar securities law standards.
- Regulated secondary market access – The use of omnibus accounts on SFC-licensed platforms establishes a compliant model for secondary trading of digital assets.
- Stronger institutional confidence – Clear SFC oversight improves investor protection, governance, and risk management—key requirements for institutional participation.
- A scalable foundation for RWA tokenization – By embedding compliance into platform design, firms can now pursue SFC-compliant tokenized securities platforms and RWA tokenization platform development with reduced legal and operational risk.
Together, these changes mark a transition from experimentation to production-ready, regulation-aligned tokenization in Hong Kong’s capital markets.
Hong Kong’s SFC Framework for Virtual Assets and Tokenized Securities
Hong Kong’s regulatory approach to virtual assets and tokenized securities is intentionally conservative, structured, and license-led. Rather than creating a parallel crypto regime, the Securities and Futures Commission (SFC) has anchored digital assets firmly within existing securities and intermediaries’ law.
Overview of the SFC Licensing Regime
At the core of Hong Kong’s model is the Type 1 licence (Dealing in Securities). This licence governs brokerage and dealing activities for traditional securities and now serves as the regulatory foundation for certain forms of virtual asset activity.
Key aspects of the regime include:
- Type 1 licence as the base layer: Firms engaging in tokenized securities or regulated digital asset trading must already be licensed securities dealers. Virtual assets are treated as an extension of regulated dealing activity, not a separate business line.
- Extension to include virtual asset dealing: Rather than issuing a new licence category, the SFC permits eligible intermediaries to extend their existing Type 1 licence to cover virtual asset trading, subject to additional conditions and safeguards.
- Clear separation of roles
The framework draws firm boundaries between:
- Advisory firms (providing investment advice)
- Brokerage intermediaries (executing trades for clients)
Platform operators (running licensed virtual asset trading platforms)
This separation limits conflicts of interest and reinforces accountability across the market structure.
Key Compliance Pillars Set by the SFC
The SFC’s framework is built around a small number of non-negotiable compliance principles that apply equally to traditional and tokenized securities.
- Investor protection and suitability: Access to virtual asset products is initially limited to professional investors, with strict suitability assessments, product governance, and disclosure requirements.
- Custody and asset segregation: Client assets must be properly segregated and held through approved custodial arrangements, reducing counterparty and insolvency risk.
- AML/CFT, KYC, and transaction monitoring: Enhanced customer due diligence, ongoing monitoring, and suspicious transaction reporting are mandatory, reflecting FATF-aligned standards.
- Market integrity and risk disclosures: Intermediaries must ensure fair execution, transparent pricing, accurate record-keeping, and clear communication of digital asset risks to clients.
Why the SFC Model Is Becoming a Global Reference
Hong Kong’s approach is increasingly viewed as a blueprint for regulated tokenization globally.
- Clear licensing pathways: Firms know which licences are required, how they can be extended, and what conditions apply—reducing regulatory guesswork.
- Institution-first design: The framework prioritises stability, governance, and risk management, making it suitable for banks, asset managers, and regulated intermediaries.
- Regulatory certainty compared to other jurisdictions: Unlike markets with fragmented or evolving rules, Hong Kong offers a predictable environment where tokenized securities can scale within the law.
Together, these elements explain why approvals like DL Holdings’ are not isolated events, but indicators of a maturing, institution-ready ecosystem for SFC-compliant tokenized securities platforms
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How to Build SFC-Compliant Tokenized Securities Platforms in Hong Kong
DL Holdings’ SFC approval reinforces that building regulated tokenized securities platforms is a sequenced process, not a technology-first exercise. Successful platforms follow a clear architectural order that mirrors securities market operations and regulatory expectations.
Step 1: Start With Licensing-Aligned System Boundaries
Architecture should be designed around regulated roles, not around token functionality.
Key actions:
- Define system boundaries based on broker, platform operator, custodian, and issuer roles
- Ensure each role maps to a required or existing SFC licence
- Prevent system designs that collapse regulated roles into a single technical entity
This avoids structural non-compliance and simplifies regulatory review.
Step 2: Implement Investor Identity and Eligibility as the Entry Layer
Before any token logic is deployed, platforms must establish identity-first access control.
Core components:
- KYC and professional-investor verification as mandatory onboarding gates
- Identity mapping that links each wallet or account to a verified investor
- Ongoing eligibility checks rather than one-time verification
This step ensures that only permitted investors can ever hold or transact tokenized securities.
Step 3: Encode Transfer Rules Before Token Issuance
Transfer logic must be defined before issuance, not added later.
Required capabilities:
- Pre-defined transfer restrictions aligned with SFC rules
- Automatic blocking of non-compliant transfers
- Rule engines that reflect investor type, jurisdiction, and product conditions
This step turns regulatory requirements into enforceable system behavior.
Step 4: Design Issuance Workflows That Mirror Securities Processes
Token issuance should follow a controlled approval flow, similar to traditional securities issuance.
Key elements:
- Issuer approval checkpoints
- Compliance sign-off before minting
- Clear linkage between offering documents and token parameters
This ensures tokenized securities are issued with the same discipline as conventional instruments.
Step 5: Separate Trading Execution from Token Ownership Records
Under Hong Kong tokenized securities regulation, trading and ownership are related—but distinct.
Architectural implications:
- Trading execution handled by licensed intermediaries
- Ownership records maintained through controlled ledgers or registries
- Clear reconciliation between executed trades and token balances
This structure supports auditability and regulatory supervision.
Step 6: Integrate Custody and Safeguarding at the Core
Custody should be treated as a primary architectural layer, not an operational afterthought.
Key requirements:
- Segregation of client and proprietary assets
- Defined custody interfaces for tokenized instruments
- Controls for recovery, transfer approval, and incident response
This step is essential for institutional confidence and regulatory approval.
Step 7: Build Reporting and Auditability into Every Layer
Regulated tokenization requires continuous visibility, not periodic reporting.
Platforms must support:
- End-to-end transaction logs
- Investor-level position reporting
- Regulator-ready audit trails across issuance, trading, and custody
This reduces operational risk and supports ongoing supervision.
Step 8: Plan for Secondary Market Readiness from Day One
Even if liquidity is limited initially, platforms must be secondary-market ready.
This includes:
- Compatibility with SFC-licensed trading platforms
- Omnibus account support
- Real-time reconciliation and compliance monitoring
Secondary market readiness is critical for long-term viability.
DL Holdings’ SFC approval demonstrates that tokenization succeeds when it follows market structure, not when it tries to reinvent it. Platforms that adopt a sequential, regulation-first architecture are better positioned to scale, attract institutional participants, and operate sustainably within Hong Kong’s regulated environment.
What This Signals for Builders, Issuers, and Institutions
DL Holdings’ approval sends different—but equally important—signals to each market participant group.
For Platform Builders and Fintechs
For builders, the message is clear:
- Licensing strategy must come before product launch: Regulatory alignment should shape architecture, not follow it.
- Modular, regulator-friendly design is essential: Platforms should support broker-led execution, identity controls, transfer restrictions, and reporting by design.
Successful SFC-compliant tokenized securities platforms will look more like financial infrastructure than consumer crypto applications.
For Asset Issuers
Issuers can no longer treat tokenization as a purely technical exercise.
Key priorities include:
- Correct securities classification: Token structures must align with how regulators view the underlying asset.
- Disclosure and governance over token features: Investor rights, cash-flow logic, and reporting matter more than smart-contract complexity.
Tokenization enhances distribution and efficiency—but it does not replace issuer responsibility.
For Institutional Investors
For institutions, regulatory clarity changes how tokenized assets are perceived:
- Reduced counterparty and compliance risk: Licensed intermediaries and regulated platforms lower exposure to legal uncertainty.
- Tokenized assets become allocatable: With SFC oversight, tokenized securities move from experimental allocations to viable portfolio components.
This is a critical step toward mainstream institutional adoption.
Hong Kong’s Position in the Global Tokenized Securities Landscape
Globally, regulatory approaches to tokenization remain uneven:
- Singapore emphasizes sandbox-driven innovation
- Dubai focuses on market-specific virtual asset frameworks
- The EU is progressing through MiCA and pilot regimes
- The US remains fragmented across agencies
Hong Kong’s advantage lies in:
- Clear integration with securities law
- Defined roles for intermediaries and platforms
- Strong coordination between regulators and policymakers
This regulatory coherence is why Hong Kong is emerging as a preferred jurisdiction for regulated tokenization activity, particularly for institutions operating across Asia.
The Future of SFC-Compliant Tokenized Markets
Several developments are likely to shape the next phase:
- Expansion beyond professional investors– Gradual retail access may follow once market controls mature.
- Evolution of secondary markets– Improved liquidity will depend on more licensed platforms and intermediaries.
- Interoperability between traditional and on-chain systems – Custody, settlement, and reporting will increasingly bridge both environments.
Over time, tokenization is likely to become a permanent capital-markets layer, not a separate asset class.
Conclusion
DL Holdings’ Hong Kong SFC approval is a clear signal that tokenization has moved beyond experimentation and into the core of regulated capital markets. It demonstrates that SFC-compliant tokenized securities platforms can be built at scale when licensing, architecture, and operations are aligned with securities law from the outset. For firms pursuing RWA tokenization platform development, the message is unambiguous: regulatory clarity is now a prerequisite, not a constraint.
Hong Kong’s approach—license-led, institution-first, and compliance-driven—offers a practical model for integrating tokenized securities into existing market infrastructure. Builders must design platforms around regulated roles, issuers must prioritise governance and disclosures, and institutions can increasingly view tokenized assets as allocatable instruments rather than experimental products. As Hong Kong tokenized securities regulation continues to mature, tokenization is set to become a permanent, trusted layer of capital markets infrastructure
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In line with the requirements highlighted by DL Holdings’ SFC approval, Shamla Tech focuses on translating regulatory expectations into platform architecture. This includes designing systems that support broker-led execution models, professional-investor onboarding, compliance-aware token issuance, regulated custody integration, and audit-ready reporting workflows.
Rather than offering generic tokenization solutions, Shamla Tech builds regulation-aligned infrastructure that mirrors securities-market operations. This enables clients to develop tokenized securities and RWA tokenization platforms that are scalable, institution-ready, and designed for long-term operation under Hong Kong tokenized securities regulation.
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