Hong Kong releases Digital Asset Development Policy Declaration 2.0! It will promote the tokenization of precious metals such as gold, non-ferrous metals, and new energy

The Hong Kong Special Administrative Region Government today (26th) issued the "Hong Kong Digital Asset Development Policy Declaration 2.0," reaffirming its commitment to making Hong Kong a global innovation center in the digital asset field. The new policy declaration builds on the initiatives proposed in the first policy declaration issued in October 2022. The "Policy Declaration 2.0" proposes a four-part strategic framework called "LEAP," which includes optimizing legal and regulatory frameworks, expanding the variety of tokenized products, advancing application scenarios and cross-sector collaboration, as well as talent and partner development. The Securities and Futures Commission (SFC) will serve as the main regulatory body for digital asset trading service providers and custodians, and a licensing mechanism for stablecoin issuers will be implemented starting August 1, 2025. The declaration clearly states that the tokenization of government bonds will be normalized and will promote the tokenization of real-world assets such as precious metals, non-ferrous metals, and renewable energy, marking a new stage in the development of digital assets in Hong Kong. Specifically: Optimizing legal and regulatory streamlining: The government is building 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 custodians. Among them, the Securities and Futures Commission (SFC) will be the main regulatory body for the licensing mechanism of future digital asset trading service providers and custodians. At the same time, the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority will lead a comprehensive review of legislation to facilitate the tokenization of real-world assets and financial instruments. This review will comprehensively examine all processes related to the issuance and trading of tokenized bonds, including but not limited to settlement, registration, and record-keeping requirements. Expanding the suite of tokenized products: The government will normalize the issuance of tokenized government bonds and provide incentives for the tokenization of real-world assets (including clarifying the stamp duty arrangements applicable to tokenized exchange-traded funds) to enhance liquidity and popularity. On this basis, the government welcomes the future trading of related tokenized exchange-traded funds on licensed digital asset trading platforms or other platforms in the secondary market. The government will also promote 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). Advancing use cases and cross-sectoral collaboration: The licensing mechanism for stablecoin issuers will be implemented on August 1, which will help advance the development of substantive application scenarios. At the same time, the government is committed to strengthening cooperation among regulatory bodies, law enforcement agencies, and technology providers to develop digital asset infrastructure. To express support and take the lead, the government welcomes market participants to suggest how the government can experiment with and utilize licensed stablecoins In addition, Cyberport will launch a pilot funding program for blockchain and digital assets to provide funding for application projects with future application potential, iconic status, and market impact. People and partnership development: The government is committed to collaborating with the industry and academia to promote talent development and position Hong Kong as an excellent center for digital asset knowledge sharing and facilitating international cooperation, including joint research programs and global regulatory collaboration. The government will establish a sustainable talent pool by nurturing the next generation of entrepreneurs, researchers, and technical experts. Financial Secretary Paul Chan stated that the "Policy Declaration 2.0" demonstrates the SAR government's vision for the development of digital assets and showcases the practical application of tokenization to promote the diversification of application scenarios. By combining prudent regulation with encouragement of market innovation, a more vibrant digital asset ecosystem that integrates with the real economy and social life will be built, bringing benefits to the economy and society while consolidating Hong Kong's leading position as an international financial center. Full Text of the "Hong Kong Digital Asset Development Policy Declaration 2.0" Vision: Building a trusted and innovation-driven digital asset center The Hong Kong Special Administrative Region Government is firmly committed to building Hong Kong into a global leading digital asset center—a market that fosters innovation in a controlled risk environment and brings tangible benefits to the real economy and financial markets while being trustworthy. 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 to the continuous 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 that empower industry development, promote inclusive finance, cultivate talent, while safeguarding investors and maintaining financial security, thereby consolidating Hong Kong's leading position as an international financial center. "LEAP": Moving towards a trusted, sustainable, and deeply integrated digital asset ecosystem with the real economy Based on the initiatives proposed in our first "Policy Declaration" 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 pilot projects for green bond tokenization, Hong Kong is now ready to move towards ( “LEAP” ) to form a trusted, sustainable, and deeply integrated digital asset ecosystem with the real economy. The Securities and Futures Commission ("SFC") previously announced the ASPIRe roadmap aimed at guiding Hong Kong's digital asset ecosystem into the future in a changing environment, implementing a series of measures to achieve a balance between investor protection and market competitiveness, such as adaptive compliance and product frameworks (e.g., derivatives trading). The "Policy Declaration 2.0" outlines the next phase 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 center The government and regulatory agencies welcome high-quality digital asset service providers from around the world to participate in our market to promote liquidity and healthy, 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 they are not limited by current technologies and that they 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 under “LEAP”, which stands for — (“ 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 use cases and cross-sectoral collaboration, and (“ P” eople and partnership development), talent and partnership development, to build a trustworthy, innovative, and vibrant digital asset ecosystem, reinforcing Hong Kong's leading position in the global financial landscape. （ “L” egal and regulatory streamlining ）Optimizing legal and regulatory frameworks: A unified and comprehensive regulatory framework; Review of tokenised legal and regulatory frameworks; （ “E” xpanding the suite of tokenised products ）Expanding the variety of tokenised products: Regularization of tokenised government bond issuance; Providing incentives for the tokenisation of real-world assets and financial assets; （ “A” dvancing use cases and cross-sectoral collaboration ）Advancing use cases and cross-sectoral collaboration: Supporting stablecoins and other tokenised projects, including exploring the use of stablecoins as payment tools; Promoting collaboration among regulatory agencies, law enforcement agencies, and technology providers; （ “P” eople and partnership development ）Talent and partnership development: Collaborating with market participants and universities to promote talent development; and Positioning Hong Kong as a center of excellence for knowledge sharing and promoting collaboration with other jurisdictions. （ “L” egal and regulatory streamlining ）Optimizing legal and regulatory frameworks: (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 to regulate 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' needs for high liquidity, large transactions, and secure custody of assets. The government proposes to designate the Securities and Futures Commission (SFC) as the primary regulatory authority for digital asset trading service providers, responsible for licensing and registration, 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 regulator for banks, overseeing their digital asset trading activities. Similarly, the SFC will serve as the primary regulatory authority for digital asset custody service providers, responsible for licensing and registration, as well as setting standards, while the HKMA will act as the frontline regulator for banks, overseeing their digital asset custody activities. This unified and comprehensive regulatory arrangement 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 foster market innovation and protect investors. We will conduct regular reviews and maintain close communication with stakeholders to ensure the framework can adapt to technological and market developments. Meanwhile, 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 Asset Risks," 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 presents opportunities for integrating new technologies with traditional finance, which can drive economic activity and innovate financial market structures, thereby enhancing efficiency, reducing costs, increasing transparency, and promoting investor participation. To fully realize this potential, a clear, explicit, and convenient legal and regulatory system is essential. The Financial Services and the Treasury Bureau and the HKMA will lead the review of the relevant legal and regulatory framework, referencing international experiences and practices to facilitate 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. We will comprehensively review 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 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: Regularisation of tokenised government bond issuance The government has issued tokenised green bonds twice (totaling approximately HKD 6.8 billion), proactively demonstrating the benefits of tokenisation schemes. Based on this, the government will regularise the issuance of tokenised government bonds and explore different currency and maturity arrangements, as well as other innovative options. The government hopes 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 tokenisation, the Financial Services and the Treasury Bureau and the Monetary Authority will continue to communicate with industry experts to understand various market perspectives, including the incorporation of 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 being the first to issue tokenised bonds and regularising them, enhancing market confidence in this technology while encouraging adoption by the public and private sectors. (d) Providing incentives for the tokenisation of real-world assets and financial assets The tokenisation 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), we actively encourage innovative application scenarios, including the tokenisation 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 tokenised deposits, simplifying processes and enhancing 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 with the LME. To further develop the commodity trading ecosystem, the government encourages the market to apply tokenisation and physical asset tracking technology in warehousing programs. Token creation technology can serve as identification tags for global warehouses, assisting in tracking metal assets and related data such as sustainability, promoting Hong Kong's further integration into the global warehouse network. The government will intensify efforts to expand tokenisation schemes, promoting broader tokenisation 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 upon transfer. To promote the development of the tokenisation market, the government will clarify that these stamp duty exemptions also apply to tokenised ETFs. Based on this exemption, the government welcomes market participants to explore the advantages of tokenising 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-recognised funds through tokenisation The government will submit legislative proposals to include specified digital assets in private placements of funds and family investment control tools that can enjoy profits tax exemptions for qualified transactions. If the proposal is passed by the Legislative Council, the tax exemption will take effect from the 2025/2026 tax year. (“A” dvancing use cases and cross-sectoral collaboration): (e) Support for stablecoins and other tokenized projects, including exploring the use of stablecoins as payment tools 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 regime for stablecoin issuers starting from 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 their reliability for use 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 various application scenarios to address substantial pain points in economic activities. To demonstrate government support and take the lead, we welcome market participants to propose how the government can experiment with and utilize licensed stablecoins, such as enhancing the efficiency of government payments. (f) Promote collaboration among regulatory bodies, law enforcement agencies, and technology providers As Hong Kong's digital technology incubator, Cyberport has been actively supporting tokenization projects in Hong Kong and has created 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 to leverage its incubation ecosystem, providing 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, significance, and market impact. Beyond 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 Invest Hong Kong's Investment Promotion Unit welcomes and is ready to support digital asset service providers in establishing and expanding their businesses in Hong Kong. Among the various supports available, the Investment Promotion Unit can connect potential digital asset service providers with banks and different professional and support services, facilitating their business establishment The Hong Kong Exchanges and Clearing Limited has developed Hong Kong's first digital asset index, providing investors with transparent and reliable Bitcoin and Ethereum price benchmarks within the Asian time zone to support Hong Kong's development as a leading digital asset center in Asia. To maintain market integrity and enhance trust in the digital asset system, the government will encourage the development of digital asset infrastructure, including but not limited to various regulatory technologies, cybersecurity, and monitoring solutions with local experience and deep regional expertise. These tools will strengthen Hong Kong's regulatory framework and capabilities, promoting the safe and sustainable development of digital assets. The government will promote cooperation between technology providers, regulatory agencies, and law enforcement agencies to optimize these solutions, ensuring they meet the specific needs of Hong Kong's digital asset ecosystem. （ “P” eople and partnership development ）Talent and partnership development: (g) Collaborating with market participants and universities to promote talent development The government will continue to encourage training and talent development in the digital asset industry, with a particular focus on blockchain applications, artificial intelligence integration, and digital asset innovation, to cultivate local talent, attract global digital asset professionals to Hong Kong, and support the development of startups and financial institutions. The first talent list published in 2018 has included fintech professionals, including digital asset professionals from around the world. Next, Cyberport will assist the government in achieving this goal through its Web3, blockchain, and artificial intelligence technology training initiatives, thereby creating a stable reserve of professional talent, continuously driving innovation, and contributing to the local digital asset industry. These measures include experience-sharing sessions and collaboration with global digital asset companies to provide cutting-edge knowledge for our talent pool. (h) Positioning Hong Kong as a center of excellence for knowledge sharing and promoting cooperation with other jurisdictions The government will promote strategic cooperation between universities and the industry, connecting academic research with practical applications in the digital asset field. Joint research programs will focus on developing new blockchain applications, tokenization frameworks, monitoring, and AI-driven financial tools. By involving students in digital asset projects, these collaborations will cultivate a new generation of entrepreneurs, researchers, and technical experts, ensuring the continuous flow of creativity and expertise. By combining academic achievements with industry needs, we aim to establish a sustainable talent pool in Hong Kong to support our goals in digital asset development. The government will strengthen cooperation between regulatory agencies and law enforcement agencies, coordinating the work of local regulatory and law enforcement agencies to support the development of a transparent, secure, and resilient digital asset market. The government will also work with regulatory agencies to support and participate in international cooperation, including through relevant international organizations and establishing memorandums of understanding with regulatory agencies and other government entities in other jurisdictions to achieve information sharing and regulatory cooperation in the digital asset field. The government will also ensure inter-departmental cooperation through existing high-level internal mechanisms Summary: A Future of Integrated Innovation, Confidence, and Opportunities The "Policy Statement 2.0" represents Hong Kong's determination to become a global leader in the digital asset space through “LEAP”. By establishing a unified regulatory framework, reviewing laws and regulations, normalizing the issuance of tokenized government bonds, expanding the tokenization of real-world assets and financial products, promoting stablecoin application scenarios, enhancing cooperation in regulatory matters, and driving international collaboration, the government is laying the groundwork for further innovation and market development. Combined with a thriving ecosystem supported by training and project assistance, collaboration between universities and industries, and digital asset infrastructure, Hong Kong will create significant benefits for the global real economy and financial markets. With the joint efforts of regulators, the industry, and society, we will build a future that integrates innovation, confidence, and opportunities, leading Hong Kong to a new frontier in global digital assets. Financial Services and the Treasury Bureau Government of the Hong Kong Special Administrative Region June 26, 2025 Risk Warning and Disclaimer The market carries risks, and investment should be approached with caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk