The Hong Kong Special Administrative Region government has unveiled the Hong Kong Digital Asset Development Policy Declaration 2.0 (Policy Declaration 2.0), marking a pivotal step in cementing its position as a global hub for digital assets. This comprehensive policy builds on previous regulatory advancements, including the Securities and Futures Commission’s (SFC) ASPIRe roadmap, and introduces a structured framework to foster innovation, strengthen investor protection, and integrate digital assets into the real economy.
At the heart of the declaration is the LEAP framework, an actionable blueprint that outlines four strategic pillars: Legal and regulatory streamlining, Expanding the suite of tokenised products, Advancing use cases and cross-sectoral collaboration, and People and partnership development.
The LEAP Framework: Driving Hong Kong’s Digital Future
1. Legal and Regulatory Streamlining
A unified and robust regulatory environment is foundational to building trust in digital markets. The Policy Declaration 2.0 proposes a comprehensive framework covering digital asset exchanges, stablecoin issuers, trading service providers, and custodians—with investor protection at its core.
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Key developments include:
- The Securities and Futures Commission (SFC) will serve as the primary regulator for digital asset trading and custody service providers, overseeing licensing, setting standards, and streamlining supervision.
- The Hong Kong Monetary Authority (HKMA) will supervise banks engaging in digital asset activities, ensuring alignment with prudential banking regulations.
- Public consultations on licensing regimes for digital asset service providers are expected soon, signaling a transparent and inclusive regulatory process.
Hong Kong reaffirms its commitment to international standards, including:
- IOSCO’s Policy Recommendations on Crypto and Digital Asset Markets
- FSB’s Regulatory Framework for Global Crypto-Asset Activities
- Basel Committee’s Prudential Treatment of Crypto-Asset Exposures
- OECD’s Crypto-Asset Reporting Framework for tax transparency
Additionally, the Treasury and Financial Bureau and HKMA will lead a review of legal frameworks supporting asset tokenization—starting with bond markets. This includes assessing settlement mechanisms, record-keeping, and registration processes to ensure seamless integration of tokenized securities.
2. Expanding the Suite of Tokenised Products
Hong Kong is moving beyond pilot projects to institutionalize tokenization across financial and real-world assets.
Government-Led Tokenization Initiatives
- The government has already issued approximately HK$6.8 billion in tokenized green bonds through two successful pilots.
- Going forward, tokenized government bond issuance will be regularized, establishing a reliable benchmark for institutional investors.
Real-World Asset (RWA) Tokenization
Tokenizing physical assets unlocks liquidity and democratizes access. The policy supports:
- Ensemble Project by HKMA: A multi-institution platform exploring tokenized money market funds, bank deposits, and other financial instruments. Future phases may enable interbank settlement of tokenized deposits.
- Precious and industrial metals: With the London Metal Exchange now including Hong Kong in its global warehouse network, the government encourages tokenization of gold, copper, and other commodities using asset-tracking technologies.
- Renewable energy assets: Tokenization of solar panels and clean energy projects is being promoted to attract ESG-focused capital.
Tax and Market Incentives
To boost adoption, the government proposes:
- Extending stamp duty exemption—currently applicable to ETF transfers on the Hong Kong Stock Exchange—to tokenized ETFs.
- Introducing profits tax exemptions for specified digital asset transactions within private fund structures and family investment vehicles. If passed, this would take effect from the 2025/2026 tax year.
These measures aim to make Hong Kong one of Asia’s most tax-efficient jurisdictions for digital asset investment.
3. Advancing Use Cases and Cross-Sector Collaboration
Regulation alone isn’t enough—ecosystem growth requires practical applications and strong partnerships.
Stablecoin Regulation and Adoption
A major milestone: Hong Kong will implement a regulatory regime for stablecoin issuers starting August 1, 2025. The framework will set requirements for:
- Reserve asset management
- Price stability mechanisms
- Redemption processes
- Risk management practices
Market participants are invited to submit proposals on how licensed stablecoins can be tested and deployed in real-world scenarios—such as cross-border payments or trade finance.
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Innovation Support and Infrastructure Development
- Cyberport, Hong Kong’s digital technology park, will launch a Blockchain and Digital Asset Pilot Funding Scheme to support high-potential projects with funding, mentorship, and technical resources.
- The InvestHK agency stands ready to assist digital asset firms in setting up or expanding operations in Hong Kong.
- Hong Kong Exchanges and Clearing Limited (HKEX) has launched its first suite of digital asset indices, offering transparent price benchmarks for Bitcoin and Ethereum in the Asian time zone.
Cyberport will also strengthen collaboration among regulators, law enforcement, and tech providers—fostering innovation while ensuring compliance and security.
Building Secure Digital Infrastructure
The government emphasizes the need for homegrown regtech, cybersecurity, and monitoring tools tailored to digital asset markets. Public-private partnerships will be key to developing resilient systems capable of detecting fraud, preventing money laundering, and ensuring market integrity.
4. People and Partnership Development
Talent is the engine of innovation. To sustain long-term growth, Hong Kong is investing in human capital and global cooperation.
- Cyberport will expand training programs focused on blockchain development, AI integration, and digital financial innovation, helping build a deep talent pipeline.
Strategic collaborations between universities and industry players will drive applied research in areas like:
- New blockchain architectures
- Tokenization protocols
- AI-powered risk analytics
- Regulatory compliance tools
The government will also enhance coordination among local regulators and law enforcement agencies while actively participating in international forums to shape global digital asset standards.
Frequently Asked Questions (FAQ)
Q: What is the LEAP framework?
A: LEAP stands for Legal & Regulatory Streamlining, Expanding Tokenised Products, Advancing Use Cases, and People & Partnership Development—a strategic roadmap guiding Hong Kong’s digital asset ecosystem growth.
Q: When will stablecoins be regulated in Hong Kong?
A: The regulatory regime for stablecoin issuers takes effect on August 1, 2025, covering reserves, redemption, and risk controls.
Q: Are tokenized ETFs tax-exempt in Hong Kong?
A: Yes—stamp duty exemptions for ETF transfers on HKEX now apply equally to tokenized ETFs, enhancing their attractiveness to investors.
Q: Will tokenized government bonds become routine?
A: Yes—the government plans to regularize tokenized bond issuance following two successful pilot programs totaling HK$6.8 billion.
Q: How is Hong Kong supporting Web3 startups?
A: Through Cyberport’s pilot funding scheme, business matching, technical support, and accelerator programs focused on blockchain and digital assets.
Q: Is Hong Kong open to foreign digital asset firms?
A: Absolutely. InvestHK actively supports international companies looking to establish or expand their presence in Hong Kong’s growing digital economy.
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Hong Kong’s Policy Declaration 2.0 represents more than just regulation—it's a bold vision for an inclusive, innovative, and globally connected digital finance ecosystem. By combining clear rules with forward-looking incentives, Hong Kong is positioning itself at the forefront of the tokenized economy.
With sustained investment in infrastructure, talent, and cross-border collaboration, the city is well on its way to becoming Asia’s premier digital asset gateway.