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

On June 26, news emerged 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 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" 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, 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 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 offer a cost-effective alternative outside of traditional systems, with the potential to revolutionize payment, supply chain management, and capital market activities. The Hong Kong government will implement a regulatory framework 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" shows that many enterprises participating in cross-border trade and settlement business express strong interest in using stablecoins to reduce costs and accelerate transaction processes. To fully leverage the potential of stablecoins, the government and regulatory agencies will provide a favorable market environment and necessary regulatory guidance, promoting licensed stablecoin issuers in Hong Kong to research and implement solutions to address 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 for 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 applicant projects with future application potential, iconic significance, and market impact.
The following is the full text of the "Policy Declaration 2.0":
Hong Kong Digital Asset Development Policy Declaration 2.0
Vision: Build a trusted and innovation-driven digital asset center
The Government of the Hong Kong Special Administrative Region is committed to building Hong Kong into a global leading digital asset center—one that fosters innovation in a controlled risk environment, brings substantial benefits to the real economy and financial markets, and is 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 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, consolidating Hong Kong's leading position as an international financial center.
"LEAP": Moving towards the formation of a trusted, sustainable, and deeply integrated digital asset ecosystem in the real economy.
Based on the measures proposed in the first "Policy Declaration" in October 2022, including establishing robust regulation, launching exchange-traded funds ("ETFs") for digital asset trading, expanding investor channels through allowing retail participation, and initiating experimental projects such as green bond tokenization, Hong Kong is now ready to take a step 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 Hong Kong's digital asset ecosystem towards the future in a 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. 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, orderly competition.
To achieve this vision and goal of 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 policy directions and measures, we strive to ensure 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", which includes - ("L"egal and regulatory streamlining) optimizing legal and regulatory processes, ("E"xpanding the suite of tokenised products) expanding the variety of tokenised 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, 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 agencies 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 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 main 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. Meanwhile, the Hong Kong Monetary Authority ("HKMA") will act as the frontline regulatory body for banks, overseeing their digital asset trading activities.
Similarly, the Securities Regulatory Commission will serve as the main regulatory body for digital asset custody service providers, responsible for licensing and registration, as well as setting standards, while the Monetary Authority will act as the frontline regulatory agency 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 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 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 "Prudential Treatment of Crypto Assets", and the Organization for Economic Cooperation and Development'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 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 leverage these potentials, 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 facilitate the further application of tokenization in Hong Kong. The initial focus of the review will be on the bond market, which 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. 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 results and related improvement suggestions are practical and can 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) Tokenization of government bond issuance normalization
The government has issued tokenized green bonds twice (with a total amount of approximately HKD 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 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 broader investor base. To further leverage the advantages of tokenization, the Treasury and Monetary Authority will continue to communicate with industry experts to understand various market opinions, including those related to incorporating 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 to regularize 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
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 Hong Kong Monetary Authority's Ensemble project, which the Securities and Futures Commission is a major partner in and co-leads with the Monetary Authority in encouraging participation from the asset management industry, innovative application scenarios are actively encouraged, 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 Monetary Authority is exploring the establishment of 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 approved warehouse operators in Hong Kong to store metals registered under the London Metal Exchange brand. To further develop the commodity trading ecosystem, the government encourages the market to apply tokenization and physical asset tracking technologies in warehousing programs. Token creation technology can serve as an identification label for global warehouses, assisting in tracking metal assets and related data such as their sustainability, promoting Hong Kong's further integration into the global warehouse network.
The government will increase efforts to expand tokenization programs, promoting a broader tokenization of assets and financial instruments, showcasing the technology's diverse applications 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 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 through tokenization.
The government will submit legislative proposals to include specified digital assets in qualified transactions that enjoy profits tax exemptions for privately offered funds and family investment control tools. 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) Promote 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 provide a cost-effective alternative outside 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 from 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 realizing 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 involved in cross-border trade and settlement have expressed 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 to promote research and implementation of licensed stablecoin issuers in Hong Kong across different application scenarios, addressing substantial pain points in economic activities. To demonstrate government support and take a leading role, market participants are encouraged to suggest how the government can experiment with and utilize licensed stablecoins, such as improving 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 and providing a thriving environment for startups to explore innovative fintech solutions through collaboration with the Hong Kong 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, utilizing its incubation ecosystem to provide support, including business matching opportunities, technical support, 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 blockchain and digital asset pilot funding program to provide funding for application projects 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.