Hong Kong releases Policy Declaration 2.0, aiming to build a global digital asset innovation center.

On June 26, news came that the Hong Kong SAR government released the "Hong Kong Digital Asset Development Policy Declaration 2.0" (referred to as "Policy Declaration 2.0"), reaffirming the government's commitment to making Hong Kong a global innovation center in the digital asset field.
The "Policy Declaration 2.0" proposes the "LEAP" framework, which includes optimizing legal and regulatory (Legal and regulatory streamlining), expanding the suite of tokenised products (Expanding the suite of tokenised products), advancing use cases and cross-sectoral collaboration (Advancing use cases and cross-sectoral collaboration), and people and partnership development (People and partnership development), among others.
The content of "Optimizing Legal and Regulatory" shows that the Hong Kong 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.
The "Policy Declaration 2.0" clearly states that the Hong Kong Securities and Futures Commission is the main regulatory body for digital asset trading service providers, responsible for licensing and registration matters, establishing standards, optimizing regulatory processes, and reducing potential regulatory arbitrage under different digital asset regulatory frameworks; the Hong Kong Monetary Authority will act as the frontline regulatory body for banks, overseeing their digital asset trading activities.
In the section "Promoting Application Scenarios and Cross-Industry Cooperation," the "Policy Declaration 2.0" supports stablecoins and other tokenized projects, including exploring the use of stablecoins as a payment tool.
The "Policy Declaration 2.0" points out that stablecoins provide a cost-effective alternative outside the traditional system, with the potential to revolutionize payments, supply chain management, and capital market activities. The Hong Kong government will implement a regulatory framework for stablecoin issuers starting on August 1, 2025, establishing relevant requirements for reserve asset management, stabilization mechanisms, redemption processes, and prudent risk management.
The "Policy Declaration 2.0" shows that many enterprises involved in cross-border trade and settlement services have expressed strong interest in using stablecoins to reduce costs and speed up transaction processes. To fully leverage the potential of stablecoins, the government and regulatory agencies will provide a favorable market environment and necessary regulatory guidance to promote the research and implementation of solutions by licensed stablecoin issuers in Hong Kong, addressing the substantive pain points in economic activities. The Hong Kong government welcomes market participants to propose suggestions on how to experiment with and use licensed stablecoins, such as for enhancing the efficiency of government payments.
In addition, Cyberport will also launch a blockchain and digital asset pilot funding scheme to provide funding for applicant projects that have future application potential, are iconic, and have market impact.
The following is the full text of "Policy Declaration 2.0":
Hong Kong Digital Asset Development Policy Declaration 2.0
Vision: To build a trustworthy and innovative digital asset center.
The Hong Kong Special Administrative Region Government is committed to building Hong Kong into a global leading digital asset center—a market that fosters innovation in a controlled risk environment, brings substantial benefits to the real economy and financial markets, and is trustworthy.
The "Hong Kong Digital Asset Development Policy Declaration 2.0" ("Policy Declaration 2.0") issued by the Financial Services and the Treasury Bureau ("FSTB") is a proactive response from Hong Kong to the ongoing evolution of the global digital asset market. Adhering to the principle of "same business, same risks, same rules," the "Policy Declaration 2.0" aims to outline forward-looking strategies that empower industry development, promote inclusive finance, cultivate talent, while safeguarding investors and maintaining financial security, thereby consolidating Hong Kong's leading position as an international financial center.
"LEAP": Moving towards the formation of a trustworthy, sustainable, and deeply integrated digital asset ecosystem within the real economy.
Based on the measures proposed in the first "Policy Declaration" published in October 2022, including establishing robust regulations, launching digital asset exchange-traded funds ("ETFs") and other innovative products, expanding investor channels by allowing retail participation, and initiating experimental projects such as green bond tokenization, Hong Kong is now ready to move towards forming a trustworthy, sustainable, and deeply integrated digital asset ecosystem in the real economy ("LEAP"). The Securities and Futures Commission ("SFC") previously announced the "ASPIRe" roadmap, aimed at guiding Hong Kong's digital asset ecosystem into the future in a constantly changing environment, implementing a series of measures such as adaptive compliance and product frameworks (like derivatives trading) to strike a balance between investor protection and market competitiveness. "Policy Declaration 2.0" outlines the next phase of development, focusing on enhancing liquidity in digital asset trading and promoting a more diverse supply of digital asset products to strengthen Hong Kong's position as a global digital asset hub. The government and regulatory bodies also welcome high-quality digital asset service providers from around the world to participate in the market to promote liquidity and healthy, orderly competition.
To achieve this vision and goal, we are creating a digital asset ecosystem that is deeply integrated with the real economy and financial markets, and is future-oriented. We propose a series of strategic policy directions and will implement corresponding measures. In formulating these policy directions and measures, we strive to ensure that they are not limited by current technologies and can adapt to the future development of digital assets, while integrating into the real economy and financial systems to achieve sustainable growth. These measures are framed under "LEAP", which stands for - ("L"egal and regulatory streamlining) optimizing legal and regulatory frameworks, ("E"xpanding the suite of tokenised products) expanding the range of tokenized products, ("A"dvancing use cases and cross-sectoral collaboration) advancing use cases and cross-departmental collaboration, and ("P"eople and partnership development) talent and partnership development, in order to build a trustworthy, innovative, and vibrant digital asset ecosystem that strengthens Hong Kong's leading position in the global financial landscape.
("L"egal and regulatory streamlining) Optimize legal and regulatory
(a) Unified and comprehensive regulatory framework
Based on the progress made since 2022, the government will continue to work with regulatory agencies and industry stakeholders to develop a comprehensive legal and regulatory framework to regulate digital assets, ensuring the sustainable and responsible development of Hong Kong's digital asset ecosystem. This system covers digital asset exchanges, stablecoin issuers, digital asset trading service providers, and digital asset custodial service providers, with a core focus on investor and consumer protection. The main next step is to conduct public consultations on the licensing mechanism for digital asset trading service providers and digital asset custodial service providers to meet investors' demands for high liquidity, large transactions, and secure custodial assets. The government proposes to designate the Securities and Futures Commission as the primary regulatory agency for digital asset trading service providers, responsible for licensing and registration matters, setting standards, optimizing regulatory processes, and reducing potential regulatory arbitrage under different digital asset regulatory frameworks. The Hong Kong Monetary Authority ("HKMA") will act as the frontline regulatory authority for banks, overseeing their digital asset trading activities.
Similarly, the Securities Regulatory Commission will act as the main regulatory authority for digital asset custody service providers, responsible for licensing and registration, as well as setting standards, while the Monetary Authority will serve as the frontline regulatory body for banks, overseeing their digital asset custody activities.
This unified and comprehensive regulatory framework will enhance market credibility, promote broader digital asset activities and large transactions, and provide clear guidance for market participants. This arrangement will also support effective risk management and provide liquidity, ensuring the establishment of a balanced ecosystem to foster market innovation and protect investors. Regular reviews and close communication with stakeholders will be conducted to ensure 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 Organization of Securities Commissions' "Recommendations on Crypto and Digital Asset Markets Policy", the Financial Stability Board's "Global Regulatory Framework for Crypto Asset Activities", the Basel Committee on Banking Supervision's "Prudential Treatment of Crypto Asset Risks", and the OECD's "Crypto Asset Reporting Framework" to promote tax transparency.
(b) Review of Tokenization Laws and Regulations
The tokenization of real-world assets and financial instruments provides opportunities for the integration of new technology and traditional finance, which can drive innovation in economic activities and financial market structures, thereby enhancing efficiency, reducing costs, increasing transparency, and promoting investor participation. To fully realize these potentials, clear, explicit, and convenient legal and regulatory frameworks are essential. The Treasury and the Monetary Authority will lead the review of relevant laws and regulatory frameworks, referencing international experiences and practices to facilitate 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 it is also expected to provide references for the tokenization of other real-world assets and financial instruments. A comprehensive examination of the issuance and trading processes of tokenized bonds will be conducted, including but not limited to settlement, registration, and record-keeping requirements. During the review process, the government will collaborate with legal experts and industry stakeholders to ensure that the review outcomes and related improvement recommendations are practical and meet future development needs, positioning Hong Kong as a pioneer in this innovative field.
("E"xpanding the suite of tokenised products) Expanding the variety of tokenised products
(c) Regularization of Tokenized Government Bond Issuance
The government has issued tokenized green bonds twice (totaling approximately HK$6.8 billion), proactively demonstrating the benefits of tokenization schemes. On this basis, the government will regularize the issuance of tokenized government bonds and explore arrangements involving different currencies and maturities, as well as other innovative options. The government hopes that this move will provide the market with stable and high-quality digital bonds, further expanding accessibility and attracting a broader range of investors. To further leverage the advantages of tokenization, the Treasury and the Monetary Authority will continue to communicate with industry experts to understand various market perspectives, including the incorporation of digital currencies to enhance trading efficiency, scenarios for secondary market trading applications, and further expanding investor participation in the local bond market. The government aims to establish a global benchmark by being the first to issue tokenized bonds and regularizing them, enhancing market confidence in the technology while encouraging adoption by both the public and private sectors.
(d) Provide incentives for the tokenization of real-world assets and financial assets
Tokenization 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 jointly leads the participation of the asset management industry with the HKMA), innovative application scenarios are actively encouraged, including the tokenization of traditional financial products (such as money market funds and other funds) as well as the revenue streams of real-world assets (like electric vehicle charging stations). The HKMA is exploring the establishment of Ensemble infrastructure to facilitate the settlement of tokenized deposits in the interbank market, in order to simplify processes and enhance liquidity.
The London Metal Exchange (LME) has included Hong Kong as a licensed delivery location within its global warehouse network and has approved warehouse operators in Hong Kong to store metals registered under LME brands. To further develop the commodity trading ecosystem, the government encourages the market to apply tokenization and physical asset tracking technology in storage programs. Token creation technology can serve as an identification tag for global warehouses, assisting in tracking metal assets and related data such as their sustainability, thereby promoting Hong Kong's further integration into the global warehouse network.
The government will intensify efforts to expand tokenization schemes, promoting broader tokenization of assets and financial instruments, showcasing the diverse applications of this technology across 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 upon transfer. To promote the development of the tokenized market, the government will clarify that such stamp duty exemptions also apply to tokenized ETFs. Based on 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 maintain an open attitude, considering factors such as fiscal impact and market development, to review the tax arrangements for the transfer of other Securities and Futures Commission-recognized funds after tokenization.
The government will submit legislative proposals to include specified digital assets in the eligible transactions that can enjoy profits tax exemptions for private placements of funds and family investment control tools. If the proposal is passed by the Legislative Council, the tax exemption will take effect from the 2025/2026 tax year.
(“A”dvancing use cases and cross-sectoral collaboration) Promoting application scenarios and cross-departmental cooperation
(e) Support for stablecoins and other tokenized projects, including exploring the use of stablecoins as a payment tool.
Stablecoins provide a cost-effective alternative outside the traditional system and have the potential to revolutionize payments, supply chain management, and capital market activities. The government will implement a regulatory framework for stablecoin issuers starting August 1, 2025. This framework establishes proper requirements for reserve asset management, stabilization mechanisms, redemption processes, and prudent risk management, serving as the cornerstone for achieving the aforementioned vision. These regulatory requirements help ensure the stability and credibility of stablecoin issuance, enhancing their reliability for use both locally and internationally. Many companies engaged in cross-border trade and settlement have expressed strong interest in using stablecoins to reduce costs and expedite transaction processes. To fully realize the potential of stablecoins, the government and regulatory bodies will provide a favorable market environment and necessary regulatory guidance, promoting research by licensed stablecoin issuers in Hong Kong and the implementation of solutions in various applications to address substantial pain points in economic activities. To demonstrate the government's support and take the lead, market participants are encouraged to suggest how the government could experiment with and utilize licensed stablecoins, such as to improve the efficiency of government payments.
(f) Promote collaboration among regulatory agencies, law enforcement agencies, and technology providers.
As a digital technology incubator in Hong Kong, Cyberport has been actively supporting tokenization projects in Hong Kong and providing a thriving environment for startups to explore innovative fintech solutions through collaboration with the Monetary Authority on the Ensemble project. To further support the development of tokenization projects, Cyberport will collaborate with relevant stakeholders in the digital asset industry to utilize its incubation ecosystem to provide support, including business matching opportunities, technical assistance, industry expert guidance, and participation in accelerator programs related to digital assets and Web3. Startups and companies engaged in tokenization solutions will benefit from dedicated resources that enable them to experiment with innovative ideas and commercialize them. Cyberport will also launch a pilot funding program for blockchain and digital assets to provide funding for application projects with future application potential, significance, and market impact. In addition to funding, Cyberport will assist these companies and coordinate with relevant stakeholders to support the implementation of pilot projects as needed.
The dedicated team of the Government Investment Promotion Agency welcomes and is ready to provide support.