Hong Kong's fiscal budget will be announced on February 25, with Paul Chan signaling an "embrace but cautious" approach to virtual assets

Hong Kong Financial Secretary Paul Chan Mo-po recently disclosed that the new fiscal year Budget will be announced on February 25. At the same time, he conveyed a clear policy signal regarding virtual asset development: Hong Kong should embrace financial innovation, but it must be promoted within a framework of cautious regulation. These two messages together reflect a subtle yet significant shift in Hong Kong’s attitude towards virtual assets amid economic recovery and fiscal improvement.

Fiscal Improvements and Budget Announcement Imminent

According to Chan Mo-po’s latest statements, benefiting from a booming financial market, Hong Kong’s operating surplus is expected to return ahead of schedule. Specifically, revenue from stock transaction stamp duty has increased significantly, reflecting heightened activity in the Hong Kong stock market and the prominence of IPO scale globally. In contrast, the capital account will still record a deficit, mainly due to increased government investment in public works projects.

The upcoming fiscal budget to be released on February 25 will be presented against this backdrop. The timing provides the market with ample time for expectations management. Economically, Hong Kong achieved a 3.2% growth last year, marking a stable performance in recent years.

The Balancing Act of Virtual Asset Policy

Chan Mo-po’s remarks on virtual currencies embody a typical “cautiously open” attitude. He explicitly states that virtual currencies are an important part of financial innovation and that Hong Kong should embrace this trend. However, he also candidly pointed out the risks involved:

This balanced approach indicates that Hong Kong will neither blindly embrace nor completely reject virtual assets. The government’s approach is to incorporate virtual assets into formal regulatory frameworks while enhancing investor education and awareness.

Stablecoin Development to Follow a Step-by-Step Strategy

Regarding the suggestion of linking stablecoins to gold, Chan Mo-po’s response also reflects a cautious progression. He stated that stablecoins will be developed gradually, and only after establishing a solid first step will consideration be given to linking them to gold or other assets. This means:

• Phase One: Establishment of stablecoin fundamentals and regulatory framework
• Phase Two: After the first step is solidified, explore linking to gold and other assets
• Overall Principle: Each step must be taken steadily, avoiding haste and recklessness

This incremental approach leaves room for innovation in virtual assets while ensuring risks remain manageable.

Deeper Implications of Policy Signals

From these statements, it is evident that Hong Kong is repositioning itself in the virtual asset space. The city’s previous relatively conservative stance is now clearly adjusting. Behind this shift lies the maturity of the global virtual asset market and Hong Kong’s desire as an international financial center to foster innovation.

Meanwhile, Chan Mo-po’s emphasis on cautious handling and risk prevention also indicates that Hong Kong will avoid repeating some regional lessons, instead seeking a balance between innovation and security. For investors and market participants, this is a relatively positive but not overly aggressive signal.

Summary

Hong Kong’s Financial Secretary’s latest remarks convey important messages in both the context of the upcoming fiscal budget and virtual asset policies. Fiscal improvements lay a foundation for policy innovation, while an open attitude toward virtual assets paves the way for financial innovation in Hong Kong. The step-by-step strategy for stablecoins, especially the cautious consideration of linking to gold, reflects Hong Kong’s mature thinking in balancing innovation and risk control. The budget announcement on February 25 may further clarify these policy directions. For market participants interested in Hong Kong’s virtual asset development, this remains an important trend to watch.