Hong Kong Government Releases "Hong Kong Digital Asset Development Policy Declaration 2.0" (Full Text)

Source: Official website of the Hong Kong Special Administrative Region Government

On June 26, the Hong Kong Special Administrative Region Government issued the "Hong Kong Digital Asset Development Policy Statement 2.0" ("Policy Statement 2.0"), reaffirming the government's commitment to building Hong Kong into a global innovation center in the field of digital assets. The new policy statement builds on the measures proposed in the first policy statement in October 2022.

The "Policy Statement 2.0" sets out the government's vision of building a trustworthy and innovation-oriented digital asset ecosystem, with risk management and investor protection as the top priority, while striving to bring tangible benefits to the real economy and financial markets. The new policy statement proposes the "LEAP" framework, with the following highlights:

• Legal and regulatory streamlining: The Government is building a unified and comprehensive regulatory framework for digital asset service providers, covering digital asset trading platforms, stablecoin issuers, digital asset trading service providers and digital asset custody service providers. Among them, the Securities and Futures Commission (SFC) will serve as the main regulator for the future licensing mechanism for digital asset trading service providers and digital asset custody service providers. At the same time, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority will lead a comprehensive legislative review to promote the tokenization of real-world assets and financial instruments. The review will comprehensively review all processes of tokenized bond issuance and trading, including but not limited to settlement, registration and record-keeping requirements.

• Expanding the suite of tokenized products: The Government will regularize the issuance of tokenized government bonds and provide incentives for the tokenization of real-world assets (including by clarifying the stamp duty arrangements applicable to tokenized exchange-traded funds) to enhance liquidity and popularity. On this basis, the Government welcomes the secondary market trading of relevant tokenized exchange-traded funds through licensed digital asset trading platforms or other platforms in the future. The Government will also promote the tokenization of a wider range of assets and financial instruments to demonstrate the diverse applications of the technology in different sectors, including precious metals (such as gold), non-ferrous metals and renewable energy (such as solar panels).

• Advancing use cases and cross-sectoral collaboration: The licensing mechanism for stablecoin issuers will be implemented on August 1, which will help promote the development of real application scenarios. At the same time, the Government is also committed to strengthening the collaboration between regulators, law enforcement agencies and technology providers to develop digital asset infrastructure. To express support and take the lead, the Government welcomes suggestions from market participants on how the Government can experiment and use licensed stablecoins. In addition, Cyberport will also launch a blockchain and digital asset pilot funding scheme to provide funding for applications with future application potential, iconic and market-impactful projects.

• People and partnership development: The Government is committed to working with the industry and academia to promote talent development and position Hong Kong as a center of excellence for digital asset knowledge sharing and promoting international cooperation, including joint research programs and global regulatory collaboration. The Government will build a sustainable talent pool by nurturing a new generation of entrepreneurs, researchers and technical experts.

The following is the full text of the Policy Declaration 2.0:

Hong Kong Digital Asset Development Policy Declaration 2.0  

Vision: Building a Trustworthy and Innovation-Driven Digital Asset Center  

The Hong Kong Special Administrative Region Government is determined to build Hong Kong into a world-leading digital asset center - a trustworthy market that allows innovation to flourish in a risk-controlled environment and brings tangible benefits to the real economy and financial markets.   

The Policy Statement on Digital Asset Development in Hong Kong 2.0 (Policy Statement 2.0) issued by the Financial Services and the Treasury Bureau (“FSTB”) is Hong Kong’s proactive response to the continued evolution of the global digital asset market. Adhering to the principle of “same business, same risks, same rules”, Policy Statement 2.0 aims to outline forward-looking strategies to empower the industry, promote inclusive finance, and cultivate talents, while protecting investors and maintaining financial security, and consolidating Hong Kong’s leading position as an international financial center.   

“LEAP”: Towards a Trustworthy, Sustainable and Deeply Integrated Digital Asset Ecosystem  

Building on the initiatives outlined in the first Policy Statement in October 2022, including establishing robust regulation, launching innovative products such as digital asset exchange-traded funds (“ETFs”), broadening investor access by allowing retail participation, and launching pilot projects such as green bond tokenization, Hong Kong is now ready to move towards (“LEAP”) a trustworthy, sustainable and deeply integrated digital asset ecosystem. The Securities and Futures Commission (“SFC”) recently announced the “ASPIRe” roadmap, which aims to guide Hong Kong’s digital asset ecosystem into the future in an ever-changing environment, implementing a series of measures such as adaptive compliance and product frameworks (such as derivatives trading) to strike a balance between investor protection and market competitiveness. The Policy Statement 2.0 outlines the next phase of development, focusing on enhancing digital asset trading liquidity and promoting a more diversified digital asset product offering to strengthen Hong Kong’s position as a global digital asset hub. The government and regulators also welcome high-quality digital asset service providers from around the world to participate in the market to promote liquidity and healthy and orderly competition. To achieve this vision and goal, and to build a digital asset ecosystem that is deeply integrated with the real economy and financial markets and is future-oriented, we have proposed a series of strategic policy directions and will implement corresponding measures. When formulating policy directions and measures, we strive to ensure that they are not limited by current technology and can adapt to the future development of digital assets while integrating into the real economy and financial system to achieve sustainable growth. These measures are based on the "LEAP" framework, namely ("Legal and regulatory streamlining"), ("Expanding" the suite of tokenised products) , ("Advancing use cases and cross-sectoral collaboration) , ("People and partnership development") , to build a trustworthy, innovative and dynamic digital asset ecosystem and strengthen Hong Kong's leading position in the global financial landscape.   

(“Legal and regulatory streamlining) Optimizing legal and regulatory streamlining  

- (a) Unified and comprehensive regulatory framework;  

- (b) Review of legal and regulatory aspects of tokenization;   

(“Expanding the suite of tokenised products) Expanding the types of tokenised products  

- (c) Regularizing the issuance of tokenized government bonds;  

- (d) Providing incentives for the tokenization of real-world assets and financial assets;   

(“A”dvancing use cases and cross-sectoral collaboration) Promoting application scenarios and cross-sectoral collaboration  

- (e) Supporting stablecoins and other tokenized projects, including exploring the use of stablecoins as payment tools;  

- (f) Promoting collaboration among regulators, law enforcement agencies and technology providers;   

(“Poly and partnership development) Talent and partnership development  

- (g) Collaborating with market participants and universities to promote talent development; and  

- (h) Positioning Hong Kong as a centre of excellence for knowledge sharing and promoting collaboration with other jurisdictions   

(“Legal and regulatory streamlining) Optimizing legal and regulatory streamlining  

(a) Unified and comprehensive regulatory framework  

Building on the progress made since 2022, the Government will continue to work with regulators and industry stakeholders to develop a comprehensive legal and regulatory framework to govern digital assets and ensure the sustainable and responsible development of Hong Kong’s digital asset ecosystem. The regime covers digital asset exchanges, stablecoin issuers, digital asset trading service providers and digital asset custody service providers, and is centered on investor and consumer protection. The next major step is to conduct a public consultation on the licensing mechanism for digital asset trading service providers and digital asset custody service providers to meet the needs of investors in finding high liquidity, large-volume transactions and secure custody assets. The Government proposes to designate the SFC as the lead regulator for digital asset trading service providers, responsible for licensing and registration, setting standards, optimizing regulatory processes, and reducing potential regulatory arbitrage under different digital asset regulatory frameworks. The Hong Kong Monetary Authority (“HKMA”) will serve as the frontline regulator of banks to supervise their digital asset trading activities.   

Similarly, the SFC will serve as the lead regulator for digital asset custody service providers, responsible for licensing and registration, and setting standards, while the HKMA will serve as the frontline regulator of banks to supervise their digital asset custody activities.   

This unified and comprehensive regulatory arrangement will enhance market credibility, promote a wider range of digital asset activities and large transactions, and provide clear guidance for market participants. This arrangement will also support effective risk management and liquidity provision, ensuring a balanced ecosystem to promote market innovation and protect investors. Regular reviews and close communication with stakeholders will be conducted to ensure that the framework can adapt to technological and market developments.   

At the same time, Hong Kong will continue to implement international standards related to digital assets, including the International Securities Commission's "Crypto and Digital Asset Market Policy Recommendations", the Financial Stability Board's "Global Regulatory Framework for Crypto-Asset Activities", the Basel Committee on Banking Supervision's "Prudent Approach to Crypto-Asset Risk Taking", and the Organization for Economic Cooperation and Development's "Crypto-Asset Reporting Framework" to promote tax transparency.   

(b) Tokenization Legal and Regulatory Review  

The tokenization of real-world assets and financial instruments provides an opportunity to integrate new technologies with traditional finance, promote innovation in economic activities and financial market structures, thereby improving efficiency, reducing costs, enhancing transparency and promoting investor participation. To fully realize this potential, a clear, unambiguous and convenient legal and regulatory system is essential. The Treasury and the HKMA will take the lead in reviewing the relevant legal and regulatory frameworks, with reference to international experience and practices, to promote the further application of tokenization in Hong Kong. The initial review will focus on the bond market that has passed the proof-of-concept stage, and also hopes to provide reference for the tokenization of other real-world assets and financial instruments. A comprehensive review will be conducted on the issuance and trading processes of tokenized bonds, including but not limited to settlement, registration and record-keeping requirements. During the review process, the Government will work with legal experts and industry stakeholders to ensure that the review findings and related improvement recommendations are practical and can meet future development needs, making Hong Kong a pioneer in this innovative field.   

(“Expanding the suite of tokenized products) Expanding the suite of tokenized products  

(c) Regularizing the issuance of tokenized government bonds  

The Government has issued two tokenized green bonds (totaling approximately HK$6.8 billion) to proactively demonstrate the benefits of tokenization. On this basis, the Government will regularise the issuance of tokenised government bonds and explore different currencies and tenor arrangements, as well as other innovative options. The Government hopes to provide the market with a stable and high-quality digital bond offering, further broaden accessibility and attract a wider range of investors through this move. To further leverage the advantages of tokenisation, the Treasury and the HKMA will continue to communicate with industry experts to understand the views of different aspects of the market, including the inclusion of digital currencies to improve transaction efficiency, secondary market transaction application scenarios, and further expand investor participation in the local bond market. By taking the lead in issuing tokenised bonds and regularising them, the Government aims to set a global benchmark, enhance market confidence in the technology, and encourage adoption by the public and private sectors. (d) Providing incentives for the tokenisation of real-world assets and financial assets Tokenisation of real-world assets and financial market instruments can enhance the efficiency, accessibility and potential liquidity of the Hong Kong market. Through the HKMA’s Ensemble project, in which the SFC is a key partner and co-leads the participation of the asset management industry, innovative use cases are actively encouraged, including tokenized traditional financial products (such as money market funds and other funds) and the income stream of real-world assets (such as electric vehicle charging stations). The HKMA is exploring the establishment of Ensemble infrastructure to facilitate the settlement of tokenized deposits between banks to simplify the process and enhance liquidity. The London Metal Exchange (LME) has included Hong Kong as a licensed delivery location in its global warehouse network and approved warehouse operators in Hong Kong to store metals with LME registered brands. To further develop the commodity trading ecosystem, the Government encourages the market to apply tokenization and physical asset tracking technology in warehousing programs. Token creation technology can serve as an identification tag for global warehouses to help track metal assets and related data such as their sustainability, and promote Hong Kong’s further integration into the global warehouse network.   

The Government will step up efforts to expand tokenization solutions and promote the tokenization of a wider range of assets and financial instruments, demonstrating the diverse applications of the technology in different sectors, including precious metals (such as gold), non-ferrous metals and renewable energy (such as solar panels).   

Currently, all exchange-traded funds (ETFs) listed on the Hong Kong Stock Exchange are exempt from stamp duty when they are transferred. To promote the development of the tokenization market, the Government will clarify that such stamp duty exemption measures also apply to tokenized ETFs. On the basis of this exemption, the Government welcomes market participants to explore the advantages of tokenizing ETFs, such as money market ETFs, including introducing them for secondary market trading on licensed digital asset trading platforms or other platforms. Looking ahead, the Government will adopt an open attitude and review the tax arrangements for the transfer of other SFC-approved funds through tokenization, taking into account factors such as fiscal impact and market development.   

The Government will submit legislative proposals to include specified digital assets as eligible transactions for profits tax exemption for privately offered funds and family investment control vehicles. If the proposal is approved by the Legislative Council, the tax exemption will take effect from the 2025/2026 tax year.   

(“Advancing use cases and cross-sectoral collaboration) Promote application scenarios and cross-sectoral collaboration  

(e) Support stablecoins and other tokenization projects, including exploring the use of stablecoins as payment tools  

Stablecoins provide a cost-effective alternative to traditional systems and have the potential to revolutionize payment, supply chain management and capital market activities. The Government will implement a regulatory regime for stablecoin issuers from August 1, 2025. The regime sets appropriate requirements for reserve asset management, stabilization mechanisms, redemption processes and prudent risk management, and is the cornerstone of achieving the above vision. These regulatory requirements help ensure the stability and credibility of stablecoin issuance and enhance its reliability in local and international use. Many companies involved in cross-border trade and settlement businesses have expressed strong interest in using stablecoins to reduce costs and speed up transaction processes. To fully tap the potential of stablecoins, the Government and regulators will provide a favourable market environment and necessary regulatory guidance to encourage licensed stablecoin issuers in Hong Kong to study and implement solutions in different application scenarios to address real pain points in economic activities. To demonstrate the Government’s support and take the lead, market participants are welcome to provide suggestions on how the Government can experiment and use licensed stablecoins, for example, to improve the efficiency of government payments.   

(f) Facilitating collaboration among regulators, law enforcement agencies and technology providers  

As Hong Kong’s digital technology incubator, Cyberport has been strongly supporting tokenization projects in Hong Kong and providing a thriving environment for start-ups to explore innovative fintech solutions through its collaboration with the HKMA in the Ensemble project. To further support the development of tokenization projects, Cyberport will work with relevant digital asset industry stakeholders and leverage its incubation ecosystem to provide support, including business matching opportunities, technical support, guidance from industry experts and participation in accelerator programs related to digital assets and Web3. Startups and companies working on tokenized solutions will benefit from dedicated resources to enable them to test and commercialize innovative ideas. Cyberport will also launch a blockchain and digital asset pilot funding scheme to provide funding for applications with potential for future applications, landmark and market impact. In addition to funding, Cyberport will provide assistance to these companies and coordinate with relevant stakeholders to support the implementation of pilot projects as needed.   

The dedicated team at Invest Hong Kong welcomes and is ready to support digital asset service providers to set up and expand their businesses in Hong Kong. Among the many supports available, Invest Hong Kong can connect potential digital asset service providers with banks and various professional and support services and facilitate their business establishment.   

Hong Kong Exchanges and Clearing Limited has developed Hong Kong's first digital asset indices to provide investors with transparent and reliable Bitcoin and Ethereum price benchmarks within the Asian time zone to support Hong Kong's development into Asia's leading digital asset center.   

To maintain market integrity and enhance trust in the digital asset system, the Government will encourage the development of digital asset infrastructure, including but not limited to various regulatory technology, cybersecurity and surveillance solutions with local experience and deep regional expertise. These tools will strengthen Hong Kong's regulatory framework and capabilities to promote the safety and sustainable development of digital assets. The Government will promote collaboration among technology providers, regulators and law enforcement agencies to optimize these solutions to ensure that they can meet the specific needs of Hong Kong's digital asset ecosystem.   

(“Poly and partnership development) Talent and partnership development  

(g) Collaborate with market participants and universities to promote talent development  

The Government will continue to encourage training and talent development in the digital asset industry, with a particular focus on blockchain applications, artificial intelligence integration and digital asset innovation, to cultivate local talent, attract global digital asset professionals to Hong Kong, and support the development of start-ups and financial institutions. The first talent list announced in 2018 has included fintech professionals, including digital asset professionals from around the world. Cyberport will then assist the Government in achieving this goal through its initiatives in Web3, blockchain and AI technology training, thereby creating a stable pool of professional talent, continuously driving innovation and contributing to the local digital asset industry. These initiatives include experience sharing sessions and collaborations with global digital asset companies to provide the talent pool with state-of-the-art knowledge.   

(h) Positioning Hong Kong as a centre of excellence for knowledge sharing and promoting collaboration with other jurisdictions  

The Government will promote strategic collaborations between universities and the industry to connect academic research with real-world applications in the digital asset sector. Joint research initiatives will focus on developing new blockchain applications, tokenization frameworks, surveillance and AI-driven financial instruments. By engaging students in digital asset projects, these collaborations will foster a new generation of entrepreneurs, researchers and technologists, ensuring a continuous flow of creativity and expertise. By combining academic achievements with industry needs, a sustainable talent pool will be built for Hong Kong to support its goals in digital asset development.   

The Government will strengthen cooperation between regulators and law enforcement agencies and coordinate the work of local regulators and law enforcement agencies to support the development of a transparent, secure and resilient digital asset market. The Government will also support and participate in international cooperation together with regulators, including through relevant international organizations and establishing memorandums of understanding with regulators and other government agencies in other jurisdictions to achieve information sharing and regulatory cooperation in the field of digital assets. The Government will also ensure cooperation between departments through existing high-level internal mechanisms.   

Conclusion: A future that integrates innovation, confidence and opportunities  

Policy Statement 2.0 represents Hong Kong's determination to become a global leader in digital assets through the "LEAP". Through a unified regulatory framework, legal and regulatory reviews, regularizing the issuance of tokenized government bonds, expanding the tokenization of real-world assets and financial products, promoting the use of stablecoins, strengthening regulatory cooperation and promoting international cooperation, the Government is laying the foundation for further innovation and market development. Combined with a thriving ecosystem supported by training and project support, university-industry collaboration, and digital asset infrastructure, Hong Kong will create significant benefits for the global real economy and financial markets. With the joint efforts of regulators, industry and society, a future that combines innovation, confidence and opportunity will be built, leading Hong Kong to a new level of global digital asset leadership. Financial Services and the Treasury Bureau The Government of the Hong Kong Special Administrative Region June 26, 2025