Hong Kong releases Policy Declaration 2.0 to build a global digital asset innovation hub.

On June 26, news reported that the Hong Kong SAR government released the "Hong Kong Digital Asset Development Policy Declaration 2.0" (referred to as "Policy Declaration 2.0"), reiterating 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 streamlining, expanding the suite of tokenised products, advancing use cases and cross-sectoral collaboration, and people and partnership development.
The content of "Optimizing Laws and Regulations" shows that the Hong Kong government is constructing 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" clarifies that the Hong Kong Securities and Futures Commission is the primary regulatory authority 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 will act as the frontline regulatory authority 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 payment tools.
The "Policy Declaration 2.0" points out that 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 Hong Kong government will implement a regulatory regime for stablecoin issuers starting August 1, 2025, establishing relevant requirements for reserve asset management, stabilization mechanisms, redemption processes, and prudent risk management.
The "Policy Declaration 2.0" indicates that many enterprises involved in cross-border trade and settlement business have expressed strong interest in using stablecoins to reduce costs and accelerate transaction processes. To fully tap into the potential of stablecoins, the government and regulatory agencies will provide a favorable market environment and necessary regulatory guidance to promote research and implementation plans by licensed stablecoin issuers in Hong Kong, aimed at addressing substantial 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 to enhance the efficiency of government payments.
In addition, Cyberport will launch a pilot funding program for blockchain and digital assets, providing funding for application projects with future application potential, iconic status, and market influence.
The following is the full text of the "Policy Declaration 2.0":
Hong Kong Digital Asset Development Policy Declaration 2.0
Vision: To build a trustworthy and innovative digital asset center.
The Government of the Hong Kong Special Administrative Region is determined to build Hong Kong into a global leading digital asset center—a market that fosters innovation in a controllable risk environment and brings substantial benefits to the real economy and financial markets, making it a trustworthy market.
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. Upholding the principle of "same business, same risks, same rules," the "Policy Declaration 2.0" aims to outline a forward-looking strategy that empowers industry development, promotes inclusive finance, nurtures talent, while ensuring investor protection and maintaining financial security, solidifying 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 in the real economy.
Based on the initiatives proposed in the first "Policy Declaration" issued in October 2022, including establishing robust regulation, launching innovative products such as digital asset exchange-traded funds ("ETFs"), expanding investor channels by allowing retail participation, and initiating experimental projects like green bond tokenization, Hong Kong is now ready to move towards forming a trustworthy, sustainable, and deeply integrated digital asset ecosystem within the real economy under the "LEAP" initiative. The Securities and Futures Commission ("SFC") previously announced the "ASPIRe" roadmap, aimed at guiding Hong Kong's digital asset ecosystem towards 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 stage of development, focusing on enhancing the liquidity of digital asset trading and promoting a more diversified 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 of creating a digital asset ecosystem that deeply integrates 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 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 system to achieve sustainable growth. These measures are framed by "LEAP", which includes - ("L"egal and regulatory streamlining) optimizing legal and regulatory frameworks, ("E"xpanding the suite of tokenised products) expanding the variety of tokenised products, ("A"dvancing use cases and cross-sectoral collaboration) advancing application scenarios and cross-sectoral 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) optimizing legal and regulatory
(a) A unified and comprehensive regulatory framework
Based on the progress made since 2022, the government will continue to collaborate with regulatory bodies and industry stakeholders to develop a comprehensive legal and regulatory framework for regulating 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 custody service providers, with a focus on protecting investors and consumers. The next key measure is to conduct public consultation on the licensing mechanism for digital asset trading service providers and digital asset custody service providers, to meet investors' needs for high liquidity, large transactions, and secure custody of assets. The government proposes to designate the Securities and Futures Commission as the primary regulatory authority 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 body for banks, overseeing their digital asset trading activities.
Similarly, the Securities and Futures Commission will act as the main regulatory body for digital asset custodial service providers, responsible for licensing and registration, as well as setting standards, while the Monetary Authority will serve as the frontline regulator for banks, overseeing their digital asset custodial 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 framework 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 will be conducted and close communication with stakeholders will be maintained 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 Organization of Securities Commissions' "Recommendations on Crypto and Digital Asset Market Policies", the Financial Stability Board's "Regulatory Framework for the Global Crypto Asset Activities", the Basel Committee on Banking Supervision's "Prudential Treatment of Crypto Asset Risks", and the Organisation for Economic Co-operation and Development's "Crypto Asset Reporting Framework" to promote tax transparency.
(b) Review of Tokenized Law and Regulation
The tokenization of real-world assets and financial instruments provides opportunities for the integration of new technologies with traditional finance, which can promote economic activities and innovate the structure of financial markets, thereby enhancing efficiency, reducing costs, increasing transparency, and encouraging 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, which has already passed the proof of concept stage, and is also expected to provide references for the tokenization of other real-world assets and financial instruments. A comprehensive review 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 can meet future development needs, making Hong Kong 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 successively issued tokenized green bonds (totaling approximately HKD 6.8 billion) to proactively demonstrate the benefits of tokenization. Based on this, the government will regularize the issuance of tokenized government bonds and explore different currency and maturity arrangements, as well as other innovative options. The government expects to provide the market with stable and high-quality digital bonds through this initiative, further expanding accessibility and attracting a broader range of investors. To further leverage the advantages of tokenization, the Treasury and Monetary Authority will continue to communicate with industry experts to understand various aspects of the market, including opinions on incorporating digital currencies to enhance trading efficiency, secondary market trading application scenarios, and further expanding investor participation in the local bond market. The government aims to set a global benchmark by pioneering the issuance of tokenized bonds and regularizing them, enhancing market confidence in the technology while encouraging adoption by 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 (with the Securities and Futures Commission as a key partner, jointly leading the asset management industry's participation), active encouragement is given for innovative application scenarios, 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 (such as electric vehicle charging stations). The HKMA is exploring the establishment of Ensemble infrastructure to facilitate the settlement of interbank tokenized deposits, streamlining processes and enhancing liquidity.
The London Metal Exchange (LME) has included Hong Kong as an approved 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 application of tokenization and physical asset tracking technology in storage plans. Token creation technology can serve as an identification label for global warehouses, helping to track metal assets and related data such as their sustainability, thereby facilitating 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 when transferred. 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 transferring other Securities and Futures Commission-approved funds after tokenization.
The government will submit legislative proposals to include specified digital assets in the qualified transactions for private placement funds and family investment control tools that may enjoy profits tax exemptions. If the proposal is approved 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 collaboration
(e) Support stablecoins and other tokenized projects, including exploring the use of stablecoins as a payment tool.
Stablecoins provide a cost-effective alternative outside of traditional systems 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 sets out 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 enterprises engaged in cross-border trade and settlement have expressed strong interest in using stablecoins to reduce costs and expedite transaction processes. To fully leverage the potential of stablecoins, the government and regulatory bodies will provide a favorable market environment and necessary regulatory guidance to promote research and implementation of licensed stablecoin issuers in Hong Kong across various application scenarios, addressing substantive pain points in economic activities. To demonstrate government support and take the lead, market participants are encouraged to propose suggestions on how the government can experiment with and utilize licensed stablecoins, such as to enhance the efficiency of government payments.
(f) Promote cooperation 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. Through collaboration with the Monetary Authority on the Ensemble project, it provides a vibrant environment for startups to explore innovative fintech solutions. To further support the development of tokenization projects, Cyberport will collaborate with relevant stakeholders in the digital asset industry, utilizing 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 asset projects, providing funding for applications with future application potential, iconic status, 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.