Hong Kong releases Policy Declaration 2.0, creating 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"), 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 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 Legal and Regulatory" 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 body 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 serve 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 a payment tool.
The "Policy Declaration 2.0" points out that stablecoins provide a cost-effective alternative outside of 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 from August 1, 2025, setting relevant requirements for reserve asset management, stabilization mechanisms, redemption processes, and prudent risk management.
The "Policy Declaration 2.0" shows that many enterprises engaged in cross-border trade and settlement services have expressed strong interest in using stablecoins to reduce costs and expedite transaction processes. To fully harness 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, addressing substantial pain points in economic activities. The Hong Kong government welcomes market participants to propose suggestions on how to experiment with and utilize licensed stablecoins, such as enhancing the efficiency of government payments.
In addition, Cyberport will also launch a pilot funding program for blockchain and digital assets to provide 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 trusted digital asset center committed to promoting innovation.
The Government of the Hong Kong Special Administrative Region is committed to building Hong Kong into a leading global digital asset center—an environment where innovation can thrive under controlled risks and bring 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") published 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 risk, same rules," the "Policy Declaration 2.0" aims to outline forward-looking strategies, empower industry development, promote inclusive finance, cultivate talent, while ensuring investor protection and maintaining financial security, thereby consolidating Hong Kong's leading position as an international financial center.
"LEAP": A step towards forming a trusted, sustainable, and deeply integrated digital asset ecosystem within the real economy.
Building on the measures proposed in the first "Policy Declaration" issued in October 2022, including establishing robust regulation, 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 within the real economy ("LEAP"). The Securities and Futures Commission ("SFC") previously announced the "ASPIRe" roadmap, aimed at guiding the Hong Kong digital asset ecosystem towards the future in an ever-changing environment, implementing a series of measures such as adaptive compliance and product frameworks (including derivatives trading) to achieve a balance between investor protection and market competitiveness. The "Policy Declaration 2.0" outlines the next phase of development, focusing on enhancing liquidity in 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 and orderly competition.
To achieve this vision and goal, and to create a digital asset ecosystem that is deeply integrated with the real economy and financial markets, and oriented towards the future, 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 with the real economy and financial systems to achieve sustainable growth. These measures are framed by "LEAP" and include: ("L"egal and regulatory streamlining) optimizing legal and regulatory frameworks, ("E"xpanding the suite of tokenised products) expanding the variety of tokenized products, ("A"dvancing use cases and cross-sectoral collaboration) advancing application scenarios and cross-departmental collaboration, and ("P"eople and partnership development) talent and partner development, to build a trusted, innovative, and vibrant digital asset ecosystem, reinforcing Hong Kong's leading position in the global financial landscape.
("L"egal and regulatory streamlining) Optimize legal and regulation
(a) A unified and comprehensive regulatory framework
Building 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 governing 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 investor and consumer protection. The next key measure is to conduct public consultations on the licensing mechanisms 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 main regulatory body for digital asset trading service providers, responsible for licensing and registration matters, setting standards, optimizing regulatory processes, and reducing the potential for 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 serve as the primary regulatory authority for digital asset custodial service providers, responsible for licensing and registration, as well as setting standards, while the Monetary Authority will act as the frontline regulator 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 promote market innovation and safeguard 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' "Policy Recommendations on Crypto and Digital Asset Markets", the Financial Stability Board's "Global Regulatory Framework for Crypto Asset Activities", the Basel Committee on Banking Supervision's "Prudent Treatment of Crypto Asset Risk", and the Organization for Economic Cooperation and Development's "Crypto Asset Reporting Framework" to promote tax transparency.
(b) Review of Tokenized Laws and Regulations
The tokenization of real-world assets and financial instruments presents opportunities for the integration of new technologies with 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 this potential, clear, explicit, and convenient legal and regulatory frameworks are essential. The Financial Services and the Treasury Bureau and the Monetary Authority will lead a review of the relevant legal and regulatory frameworks, referencing international experiences and practices to promote further application of tokenization in Hong Kong. The initial review will focus on the bond market that has already 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. The review will comprehensively examine 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 collaborate with legal experts and industry stakeholders to ensure that the review results 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 (with a total amount of approximately HKD 6.8 billion), proactively demonstrating the benefits of the tokenization scheme. On this basis, the government will regularize the issuance of tokenized government bonds and explore different currency and term 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 wider range of investors. To further leverage the advantages of tokenization, the Financial Secretary and the Monetary Authority will continue to communicate with industry experts to understand various opinions regarding the market, including the inclusion of digital currencies to enhance trading efficiency, applications of secondary market trading scenarios, and further expanding investor participation in the local bond market. The government's aim is to set a global benchmark by being the first to issue tokenized bonds and regularizing them, enhancing market confidence in this technology, while also encouraging adoption by the public and private sectors.
(d) Provide incentives for the tokenization of real-world assets and financial assets.
The 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 SFC as a key partner, jointly leading the participation of the asset management industry), it actively encourages innovative application scenarios, including the tokenization of traditional financial products (such as money market funds and other funds) and the revenue streams of real-world assets (such as electric vehicle charging stations). The HKMA is exploring the establishment of the Ensemble infrastructure to facilitate the settlement of interbank tokenized deposits, aiming to streamline 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 the LME brand. To further develop the commodity trading ecosystem, the government encourages the market to apply tokenization and physical asset tracking technology in its warehousing programs. Token creation technology can serve as an identification label for global warehouses, helping to track metal assets and related data such as their sustainability, promoting Hong Kong's further integration into the global warehouse network.
The government will strengthen efforts to expand tokenization schemes, promoting the tokenization of a wider range of assets and financial instruments, demonstrating 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 the transfer of other Securities and Futures Commission-recognized funds through tokenization.
The government will submit legislative proposals to include specified digital assets in qualifying transactions that are eligible for profits tax exemptions under private placements of funds and family investment control tools. If the proposal is approved by the Legislative Council, the tax exemptions 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 for stablecoins and other tokenized projects, including exploring the use of stablecoins as a payment tool.
Stablecoins offer a cost-effective alternative outside traditional systems, with the potential to revolutionize payments, supply chain management, and capital market activities. The government will implement a regulatory framework for stablecoin issuers starting from August 1, 2025. This framework sets proper requirements for reserve asset management, stabilization mechanisms, redemption processes, and prudent risk management, serving as the cornerstone for realizing the aforementioned vision. These regulatory requirements help ensure the stability and credibility of stablecoin issuances, enhancing their reliability for use both locally and internationally. Many enterprises involved in cross-border trade and settlement express strong interest in using stablecoins to reduce costs and accelerate transaction processes. To fully leverage the potential of stablecoins, the government and regulatory bodies will provide a favorable market environment and necessary regulatory guidance, promoting the research and implementation of solutions by licensed stablecoin issuers in Hong Kong across different application scenarios to address substantial pain points in economic activities. To demonstrate governmental 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 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, leveraging 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 allow them to experiment with innovative ideas and commercialize them. Cyberport will also launch a blockchain and digital asset pilot grant scheme to fund projects with future application potential, significance, and market impact. Besides 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.