The release of Hong Kong’s Digital Assets Development Policy Statement 2.0 on June 26, 2025, marks a pivotal moment in the region’s financial evolution. With bold regulatory clarity, strategic tax incentives, and a forward-looking vision for tokenization, Hong Kong is positioning itself as a leading digital asset hub in the Asia-Pacific region—potentially surpassing Singapore in influence and innovation.
As Singapore tightens its grip on unlicensed Web3 operations, industry leaders are shifting focus. Hao, CEO of Legend Trading, predicts that Singapore’s impact on the global Web3 landscape will diminish over the next two to three years. With only 33 licensed firms—many restricted to local markets and lacking global competitiveness—Singapore may no longer serve as the go-to jurisdiction for scalable blockchain ventures.
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Meanwhile, analysts like Zheng Di see a clear shift: “The next Web3 center is Hong Kong.” Bolstered by strong government backing, strategic infrastructure, and a growing influx of talent, Hong Kong is capitalizing on Singapore’s retreat to reclaim its role as a global financial innovator.
The LEAP Framework: Building a Trusted Digital Ecosystem
At the heart of Hong Kong’s new policy is the LEAP framework, a comprehensive strategy designed to create a resilient, innovative, and globally competitive digital asset ecosystem. LEAP stands for:
- Legal and Regulatory Streamlining
- Expanding the Suite of Tokenised Products
- Advancing Use Cases and Cross-Sectoral Collaboration
- People and Partnership Development
This structured approach ensures that innovation thrives within a secure, transparent, and investor-friendly environment—balancing growth with risk management.
Legal & Regulatory Clarity: A Game Changer
One of the most significant developments is the proposed licensing regime for digital asset trading and custody service providers. The Securities and Futures Commission (SFC) will act as the primary regulator for both sectors, establishing clear standards and minimizing regulatory arbitrage. Meanwhile, the Hong Kong Monetary Authority (HKMA) will oversee banks engaging in digital asset activities.
This dual-regulator model brings much-needed clarity, giving institutional investors confidence in market integrity. By streamlining oversight and aligning with international best practices, Hong Kong enhances its appeal to global financial institutions exploring blockchain integration.
Tokenization Takes Center Stage
Hong Kong isn’t just regulating crypto—it’s redefining traditional finance through tokenization.
The government plans to routinize the issuance of tokenized government bonds, exploring various currencies, maturities, and settlement mechanisms. This initiative aims to set a global benchmark, demonstrating how blockchain can improve efficiency in bond issuance, clearing, and record-keeping.
Beyond bonds, the focus extends to real-world assets (RWAs) such as gold, green energy projects, and electric vehicle fleets. By enabling these assets to be represented and traded digitally, Hong Kong unlocks liquidity for previously illiquid markets.
Financial institutions are already responding. The Treasury and Financial Bureau (TFB) and HKMA are actively consulting with industry experts on integrating central bank digital currencies (CBDCs) into transaction workflows, enhancing cross-border payment efficiency and broadening investor access to local capital markets.
Tax Incentives That Drive Innovation
To accelerate adoption, Hong Kong is introducing powerful tax reforms:
- Stamp duty exemption for transfers of tokenized ETFs—mirroring existing rules for traditional ETFs listed on the Hong Kong Stock Exchange.
- Proposed profits tax exemption for specified digital asset transactions in privately offered funds and family investment holding vehicles.
- Legislative proposals expected to take effect from the 2025/2026 tax year, subject to Legislative Council approval.
These measures significantly reduce operational costs for market participants and make Hong Kong one of the most tax-competitive jurisdictions for digital asset innovation.
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Supporting Innovation Through Funding & Infrastructure
Beyond regulation and taxation, Hong Kong is investing directly in ecosystem growth.
Cyberport has launched a Blockchain and Digital Asset Pilot Funding Scheme, offering financial support to high-potential projects with real-world applications. In addition to funding, selected startups receive mentorship, industry connections, and regulatory coordination support—creating an end-to-end launchpad for innovation.
Meanwhile, the InvestHK FinTech team is actively assisting digital asset firms setting up or expanding in Hong Kong. From connecting businesses with banking partners to facilitating professional services access, the government is removing barriers to entry.
Why This Matters: A Strategic Financial Pivot
As noted by Legislative Council member and CPPCC national committee member Ng Kit-chung, this policy shift reflects more than just technological advancement—it signals Hong Kong’s intent to lead in digital-era financial innovation.
Key takeaways include:
- A deliberate move from “virtual assets” to “digital assets,” aligning terminology with global standards.
- Clear division of regulatory responsibilities between SFC and HKMA—avoiding overlap and boosting efficiency.
- Government-led use cases (e.g., tokenized bonds) that build market confidence.
- Concrete financial incentives that lower entry barriers and boost liquidity.
Ng believes Hong Kong could emerge as Asia’s compliance innovation benchmark within 3–5 years, offering a blueprint for integrating traditional finance with decentralized technologies.
Expert Endorsements: Confidence in the Vision
Hong Kong Financial Secretary Paul Chan emphasized that digital assets are not just a tech trend but a strategic lever for strengthening Hong Kong’s status as an international financial center. He highlighted the dual-track approach: prudent regulation paired with market-driven innovation.
Chan also stressed that stablecoins must serve real economic functions—such as trade settlement and cross-border payments—not speculation. This stance reinforces Hong Kong’s commitment to responsible innovation.
Similarly, Treasury Secretary Christopher Hui stated that Hong Kong’s unique position allows it to act as a strategic bridge between China’s digital economy and global financial innovation. The LEAP framework provides a clear roadmap for businesses navigating this convergence.
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Frequently Asked Questions (FAQ)
Q: Is Hong Kong replacing Singapore as Asia’s crypto hub?
A: While too early to declare definitively, Hong Kong’s proactive policies—especially in regulation, taxation, and real-world asset tokenization—are attracting significant attention. As Singapore tightens restrictions on unlicensed firms, many Web3 entrepreneurs are turning to Hong Kong for its clearer framework and government support.
Q: What is the LEAP framework?
A: LEAP is Hong Kong’s strategic roadmap for digital asset development: Legal streamlining, Expanding tokenized products, Advancing use cases, and People/partnership development. It ensures sustainable growth within a trusted regulatory environment.
Q: When will stablecoin regulation take effect in Hong Kong?
A: The SFC plans to implement a licensing regime for stablecoin issuers starting August 1, 2025—making Hong Kong one of the first jurisdictions worldwide to provide formal regulatory clarity for stablecoins.
Q: Are tokenized ETFs tax-exempt in Hong Kong?
A: Transfers of tokenized ETFs will enjoy stamp duty exemption—same as traditional ETFs. Additionally, proposed legislation would extend profits tax exemptions to certain digital asset fund transactions if passed.
Q: How is Hong Kong supporting blockchain startups?
A: Through Cyberport’s pilot funding program and InvestHK’s dedicated FinTech support team, startups gain access to capital, mentorship, banking connections, and regulatory guidance—making Hong Kong a fertile ground for innovation.
Q: Can foreign companies operate digital asset platforms in Hong Kong?
A: Yes. The SFC welcomes applications from qualified international firms under its licensing regime. With clear rules and strong infrastructure support, Hong Kong offers a compliant gateway to Asian markets.
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