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

On June 26, news came out that the Hong Kong SAR government issued 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 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 authority 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 regulator for banks, overseeing their digital asset trading activities.
In the "Promoting Application Scenarios and Cross-Industry Cooperation" section, 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 innovate payment, supply chain management, and capital market activities. The Hong Kong government will implement a regulatory framework for stablecoin issuers starting from August 1, 2025, establishing relevant requirements for reserve asset management, stability mechanisms, redemption processes, and prudent risk management.
The "Policy Declaration 2.0" shows that many enterprises participating in cross-border trade and settlement business 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 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 improving the efficiency of government payments.
In addition, Cyberport will also launch a pilot funding program for blockchain and digital assets, providing funding for applicant 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 and innovation-driven 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 where innovation can thrive in a controllable risk environment, bringing 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") 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. 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 ensuring investor protection 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.
Building on the measures 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"), broadening investor channels by allowing retail participation, and initiating experimental projects such as green bond tokenization, Hong Kong is now ready to take the leap to form a trustworthy, sustainable, and deeply integrated digital asset ecosystem within the real economy. 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 derivative trading) to strike a balance between investor protection and market competitiveness. "Policy Declaration 2.0" outlines the next stage 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 of creating a digital asset ecosystem that deeply integrates with the real economy and financial markets, while being 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 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 tokenised products, ("A"dvancing use cases and cross-sectoral collaboration) promoting application scenarios and cross-departmental collaboration, and ("P"eople and partnership development) talent and partnership 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 regulatory
(a) Unified and comprehensive regulatory framework
Building 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 major step is to conduct public consultations on the licensing mechanism for digital asset trading service providers and digital asset custody service providers to meet investors' demands for high liquidity, large-scale transactions, and secure custody of assets. The government proposes to designate the Securities and Futures Commission as the primary 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. 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 act 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 serve as the frontline regulatory authority 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 promote market innovation and protect investors. Regular reviews will be conducted, and close communication with stakeholders will be maintained 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 Risks", and the Organisation for Economic Co-operation 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 and traditional finance, promoting economic activity and structural innovation in financial markets, thereby enhancing efficiency, reducing costs, increasing transparency, and facilitating investor participation. To fully realize 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 the review of relevant laws 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, which has already passed the concept validation stage, and 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 results and related improvement suggestions 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 tokenization schemes. On this basis, 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 hopes to provide a stable and high-quality digital bond market through this initiative, 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 opinions, including those related to incorporating digital currencies to improve trading efficiency, secondary market trading applications, and further expanding investor participation in the local bond market. The government aims to set a global benchmark by being the first to issue tokenized bonds and to regularize them, enhancing market confidence in this 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 Monetary Authority's Ensemble project (with the Securities and Futures Commission as a key partner, jointly leading the participation of 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) as well as 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 an approved delivery location within its global warehouse network and has authorized 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 technology in its warehousing program. 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 increase efforts to expand tokenization schemes, promoting the tokenization of a wider range 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 these 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 and consider factors such as fiscal impact and market development to review the tax arrangements for the transfer of other SFC-recognized funds after tokenization.
The government will submit legislative proposals to include specified digital assets in qualifying transactions for private offerings of funds and family investment control tools that will enjoy profits tax exemptions. If the proposal is passed 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 inter-departmental cooperation
(e) Supports stablecoins and other tokenized projects, including exploring the use of stablecoins as a payment tool.
Stablecoins provide 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 regime for stablecoin issuers starting August 1, 2025. This regime sets 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 its 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 realize the potential of stablecoins, the government and regulatory bodies will provide a favorable market environment and necessary regulatory guidance, promoting licensed stablecoin issuers in Hong Kong to research and implement solutions for various application scenarios to address substantial pain points in economic activities. To demonstrate government support and take the lead, market participants are encouraged to suggest 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, guidance from industry experts, 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, providing funding for application projects with future application potential, iconic status, and market influence. In addition to funding, Cyberport will also 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.