Editor's note: With digital assets gaining traction in Hong Kong, the third and final part of the Real-World Crypto series explores how attitudes towards this asset class are shifting among mainstream wealth managers and their high-net-worth clients, and how these institutions are forging closer ties with crypto-native players.

Hong Kong's biggest financial scandal to surface to date, involving purported crypto exchange and investment platform JPEX, goes to court on Dec 15 with eight defendants from a wide criminal network in the dock. The charges include conspiracy to defraud and money laundering, leaving over 2,700 investors about HK$1.6 billion ($210 million) out of pocket.

JPEX had allegedly dangled eye-catching returns with minimal risks although it had never been licensed by the city's securities watchdog, the Securities and Futures Commission of Hong Kong. The average investor sees it as a reflection of the broader image of the shadowy crypto business — opaque, speculative and worlds apart from traditional finance.

The cryptocurrency industry's early boom was fueled by bold retail investors chasing quick wins. But today, as regulators in Hong Kong and elsewhere sharpen and clarify what is in the rule book, once wary but adept investors and traditional finance houses are taking the plunge into the crypto world.

Livio Weng Xiaoqi, chief executive officer of digital-asset firm Sinohope Technology, has witnessed the shift. Weighing the firm's next stage of growth, he steered away from launching another retail-focused exchange in Hong Kong — a business he has a knack for. Even the earliest licensees of the 11 regulated exchanges in the special administrative region have found themselves caught between a small and increasingly saturated onshore retail pool and prudent compliance demands, with profits seemingly far-off.

Instead, Weng now looks beyond the familiar retail crowd to institutional and high-net-worth clients whose needs, he believes, remain underserved. Early last month, Sinohope rolled out what he calls a "private-bank-grade" service tailored to this cohort, providing end-to-end, concierge-style virtual asset management.

Industry gurus say the shift from retail users to large-asset holders mirrors a broader structural turn in Hong Kong's digital-asset market — moving away from the days of grassroots speculation into an era shaped by institutional capital and affluent clientele.

TradFi steps in

A hallmark of this trend is the way traditional financial houses are edging into the digital-asset world, driven by rising client demand and clearer regulatory guardrails, coupled with complementary partnerships with crypto-native players like Sinohope. "Virtual assets are becoming more mainstream," the Private Wealth Management Association (PWMA) and KPMG China said in the Hong Kong Private Wealth Management Report 2025.

The document showed that up to 52 percent of companies serving deep-pocketed clients are investing or planning to invest in virtual-asset channels, custody tools or related products within three years — more than double the figure from a year earlier — and 27 percent of them expect to be in the game in the next six months. The number of institutions sitting on the fence has shrunk from nearly 80 percent last year to 48 percent today.

Over 90 percent of the enterprises report that up to a quarter of their clients are interested in virtual assets, a big advance from last year.

"The actual allocation is still low, but the readiness to get this asset class ready for clients has gone up pretty significantly," says Vivien Khoo, chief executive officer and managing director of the PWMA. Sentiment, she notes, is quite positive. Many firms have yet to pour in large resources, but the number of them preparing to get it going in the next six months suggests that meaningful groundwork is underway. "Otherwise, they can't just suddenly decide and say 'okay, we've got to roll something out'," she adds.

The SAR's banking heavyweights are moving in step. Standard Chartered — one of the territory's three note-issuing banks — has taken an assertive line on digital assets. Executives say the lender aims to introduce a bitcoin and ethereum custody service early next year, drawing on its regulated infrastructure to securely store the two largest-market-cap cryptocurrencies. The service is expected to debut with institutional clients.

Standard Chartered has long been a fixture in pilot programs led by the Hong Kong Monetary Authority in the areas of tokenization, the e-Hong Kong dollar and stablecoin.

"The future of banking lies in leveraging financial technology to deliver services that meet the needs of a hyper-connected world," says Mary Huen Wai-yi, Standard Chartered's chief executive officer for Hong Kong, Greater China and North Asia. "With digital assets a key and lasting component, Standard Chartered is committed to addressing clients' evolving needs and driving growth through diverse solutions."

According to Sinohope's Weng, financial products gaining traction on Wall Street usually take six to 12 months to make landfall in Asia. But, when it comes to virtual assets, Hong Kong has followed swiftly. In January last year, regulators in the United States gave the nod to the first batch of spot bitcoin exchange-traded funds from issuers that included asset-management giant Black-Rock. The products track the spot prices of the cryptocurrency, allowing investors to gain exposure through their brokerage accounts without holding the underlying assets.

Three months later, Hong Kong Exchanges and Clearing, which runs the city's bourse, listed Asia's first spot virtual-asset ETFs.Observers say the move has encouraged and opened the door for more traditional asset-management firms to enter the fray.

However, despite all the comings and goings, this new line of business is still in its early innings. Wealth managers are waiting for further clarifications, says Khoo. Questions linger over whether licensed financial institutions must obtain separate virtual-asset trading licenses, and whether exchange or custody approvals recognized in other jurisdictions would be granted the same status in Hong Kong.

Demand from the rich

The shift toward institutionalization stems from evolving demand among wealth holders. Standard Chartered Hong Kong's Affluent Digital Assets Study 2025, published in October, shows that almost 80 percent of investors polled will consider investing in digital assets in the next 12 months, with more than 30 percent already exposed to them. "The wealthier the clients, the greater confidence they have in diversifying investments through digital assets," it said.

The findings mirrored the PWMA's report, which places digital assets as the third most popular investment theme for 2025, trailing only artificial intelligence and alternative assets. "For private banks, being able to offer innovative virtual asset products is becoming a differentiator when it comes to attracting and keeping sophisticated clients," the PWMA study notes. Moreover, interest now spans a wider constituency than the "crypto rich", including traditional entrepreneurs and family offices.

As for family offices — a key segment of Hong Kong's asset-management sector — Weng believes more than 60 percent of them are interested in virtual-asset allocation.While roughly 30 to 40 percent of Sinohope's clients still have a crypto-native background, new businesses are dominated by traditional institutions, with family offices among the most active. Nearly 20 family-office clients are now in close engagement, he says.

Winnie Peng Qian, an associate professor in the business practice of finance and director of the Roger King Center for Asian Family Business and Family Office at The Hong Kong University of Science and Technology, however, warns that sentiment is fragmented. The city hosts Asia's most mature family-office ecosystem, she says, including old money and first-generation wealth, covering industries from manufacturing, real estate and finance to newer fields like internet technology and biotechnology.

Peng says she believes "new money" now outnumbers "old money" and tends to be more receptive to digital assets. But even within "new money", attitudes diverge.Among families from the Chinese mainland that make up the lion's share of the "new rich" ecosystem in Hong Kong, those who built their manufacturing and property businesses in the 1980s and 1990s are conservative, while tech founders, especially those from China's fast-growth years after 2012 or who have monetized their enterprises, are more willing to experiment with emerging asset classes.

Although preliminary findings from a survey the center launched in September found that more than 95 percent of respondents were interested in allocating to digital assets, Peng says this should not be taken to mean Hong Kong's family offices are broadly open to the asset class because respondents willing to participate in such a survey are typically those who are already interested in cryptocurrencies.

Even among the most forward-leaning families, the actual exposure remains minute, generally below two percent, according to Peng and Sinohope. Weng says most of them allocate tiny sums, not for returns, but to observe market cycles and assess risk appetite before deciding whether to scale up or step back.

Their assessments arise from needs that still are not being met. Institutional-grade products and infrastructure remain insufficient, and liquidity on Hong Kong's licensed virtual-asset exchanges is too thin to support the million-dollar trades wealthy families typically execute. Besides, families prioritizing wealth succession remain in the dark as to whether, and how, they can pass digital assets safely to the next generation.

For many of them, simply opening an account on an exchange is far from enough.They expect the same level of service they receive for traditional asset classes, such as a dedicated team that provides research, crafts optimal investment strategies, and manages their portfolios end-to-end. Their persistent anxiety about asset security also demands robust systems that can convincingly address those risks.Khoo describes much of the industry's existing infrastructure as a "legacy", saying the "fundamental need" is for that entire stack to be ready to move on-chain. True tokenization of funds and shares, for instance, requires the entire value chain — including settlement, fund administration, and other key processes — to function seamlessly on-chain, she adds.

Bridging the gap

Against these frictions, collaboration between traditional wealth managers and virtual asset firms is growing tighter. The former bring decades-old client trust and access to high-net-worth networks, while the latter contribute technology, regulatory-grade infrastructure, and the agility to keep pace with a fast-moving market.

"The involvement of major financial institutions in crypto will accelerate the industry's maturation, especially compared with participation from crypto-native players alone," Khoo says. Once institutions enter, transaction volumes and growth potential are expected to outstrip what the crypto sector could achieve on its own and, crucially, institutional involvement will give the business greater legitimacy, she says.

Most conventional financial institutions, however, lack the pipes to participate directly. "They would have to build, buy or develop the necessary technology and infrastructure, or form some joint ventures with Web3 firms," Khoo says.

Banking and financial giant JPMorgan, for instance, has built its own blockchain platform and, in late October, tokenized a private-equity fund on it, targeting the bank's private-banking clients. Shortly after, the group teamed up with Coinbase to launch JPM Coin on Base — the crypto firm's blockchain — for institutional users. Jesse Pollak, Coinbase's vice-president of engineering, says: "We believe bringing institutions on-chain has the power to unlock a truly global economy."

Hong Kong is seeing similar experiments.Standard Chartered Hong Kong, Animoca Brands and HKT have formed Anchorpoint Financial to pursue stablecoin initiatives by pooling their respective strengths — the bank's risk-management and compliance capabilities, Animoca's crypto expertise, and the telecom operator's application scenarios.

Sinohope is also working with traditional private banks. "We've moved beyond the exploratory phase", says Weng, to designing and testing concrete solutions together, aiming for "mutually beneficial" business models.

In the medium-to-long term, he says, crypto specialists and traditional wealth management firms will co-serve clients and share in the market's development — a partnership model that will grow the pie rather than carving it up.

Contact the writer at irisli@chinadailyhk.com