In June 2025, the Hong Kong government unveiled the Digital Asset Development Policy Statement 2.0 (referred to as "the Statement 2.0"), marking a strategic upgrade in its approach to digital assets and reinforcing its ambition to become a global hub for digital finance. Building upon the foundational principles of innovation support and balanced regulation, this updated policy focuses on enhancing liquidity in digital asset trading, expanding the range of tokenized financial products, and deepening integration between digital finance and the real economy.
The Statement 2.0 introduces a comprehensive framework known as LEAP, which stands for:
- Legal and regulatory streamlining
- Expanding the suite of tokenised products
- Advancing use cases and cross-sectoral collaboration
- People and partnership development
This strategic blueprint aims to cultivate a vibrant, sustainable, and innovation-driven digital asset ecosystem that is deeply embedded in Hong Kong’s broader financial infrastructure.
Core Elements of the Digital Asset Policy Upgrade
1. Recap of the Original Policy Vision
In October 2022, Hong Kong issued its first Policy Statement on Development of Virtual Assets, setting out a clear regulatory direction based on the principle of "same business, same risk, same rules." The initial declaration laid the groundwork for licensing virtual asset service providers (VASPs) and introduced plans to regulate payment-related stablecoins. It also signaled openness to exploring the legal validity of tokenized assets and smart contracts.
A landmark initiative under this phase was the pilot program for issuing tokenized green bonds, allowing institutional investors to subscribe using digital assets—a move that demonstrated early government commitment to blockchain innovation.
2. Existing Regulatory and Tax Framework
Before diving into the new policy, it's essential to understand the existing regulatory landscape:
Regulatory Oversight
Since 2017, the Securities and Futures Commission (SFC) has regulated "security tokens" under the Securities and Futures Ordinance (SFO), requiring licensing for trading platforms, portfolio managers, and funds dealing in virtual assets. For over-the-counter (OTC) transactions, operators must obtain a Money Service Operator (MSO) license from Hong Kong Customs.
A major milestone came in May 2025 with the passage of the Stablecoin Ordinance, establishing Hong Kong’s first dedicated regulatory framework for stablecoin issuers—ensuring transparency in reserve management, redemption mechanisms, and risk controls.
Tax Treatment of Digital Assets
Hong Kong’s tax approach is guided by DIPN No. 39, updated in 2020, which classifies digital tokens into three categories:
- Payment tokens (e.g., Bitcoin)
- Security tokens
- Utility tokens
Key tax implications include:
- Profits from long-term investment in digital assets are not subject to profits tax
- Income from crypto-related business activities (trading, mining, staking) is taxable
- Employment income paid in crypto is subject to salaries tax
- Gains from capital asset disposals are generally tax-exempt
This balanced taxation model supports Hong Kong’s position as a crypto-friendly jurisdiction.
Key Initiatives in the LEAP Framework
Legal and Regulatory Streamlining
Rather than creating a standalone digital asset regulator, Hong Kong is integrating oversight into its existing financial architecture:
The SFC will serve as the primary regulator for:
- Digital asset trading service providers (licensing and standards)
- Digital asset custodians (registration and supervision)
The Hong Kong Monetary Authority (HKMA) will supervise banks engaged in:
- Digital asset trading
- Custody activities
This dual-regulator model ensures clarity in jurisdictional responsibilities while minimizing regulatory arbitrage. Additionally, the Financial Services and Treasury Bureau (FSTB) and HKMA are jointly developing a legal framework for asset tokenization, drawing on international best practices to support scalable adoption.
👉 Discover how global investors are leveraging regulated digital asset platforms today.
Expanding the Suite of Tokenised Products
Hong Kong is moving beyond experimental pilots to institutionalize tokenization across financial markets.
Tokenized Government Bonds
The government plans to routinize the issuance of tokenized government bonds, exploring various currencies and maturities. This builds on the success of earlier green bond tokenization projects and aims to enhance market efficiency and investor accessibility.
Real-World Asset (RWA) Tokenization
To unlock liquidity in traditionally illiquid sectors, Hong Kong will incentivize tokenization of:
- Precious metals (e.g., gold)
- Industrial metals
- Renewable energy assets (e.g., solar panels)
- Revenue streams from physical infrastructure
The Ensemble Project, led by HKMA, plays a pivotal role here. By leveraging wholesale central bank digital currency (wCBDC), Ensemble enables seamless interbank settlement in tokenized money—paving the way for tokenized deposits and funds.
SFC’s ASPIRe Roadmap
Complementing these efforts, the SFC launched its ASPIRe roadmap in February 2025, focusing on five pillars:
- Access
- Safeguards
- Products
- Infrastructure
- Relationships
Notable measures include:
- Allowing professional investors to trade crypto derivatives
- Exploring staking services on licensed platforms
- Assessing margin lending to boost market depth
These initiatives aim to expand product offerings on regulated exchanges and attract institutional capital.
Advancing Use Cases and Cross-Sector Collaboration
The policy actively promotes practical applications of digital assets across industries.
Stablecoins as Payment Tools
With the Stablecoin Ordinance taking effect on August 1, 2025, Hong Kong establishes a robust regime for stablecoin issuers—covering reserve adequacy, redemption rights, and operational resilience. This regulatory clarity supports stablecoins’ use in payments, remittances, and cross-border trade.
A transition period allows existing operators to comply, ensuring market stability during implementation.
Industry Applications
The government encourages tokenization in commodity trading through warehouse receipt systems and supply chain tracking. These innovations enhance transparency, reduce fraud, and streamline settlement—particularly valuable in high-value goods like metals and energy.
People and Partnership Development
Sustainable growth requires talent and global cooperation.
Hong Kong will:
- Partner with universities to develop specialized curricula in blockchain and fintech
- Support industry-led training programs
- Position itself as a global knowledge hub for digital asset innovation
Internationally, Hong Kong seeks to strengthen ties through:
- Bilateral regulatory memoranda of understanding (MOUs)
- Participation in global forums like the IMF and BIS
- Information sharing on anti-money laundering (AML) and consumer protection
👉 See how top institutions are preparing for the next wave of tokenized finance.
Tax Incentives to Boost Market Participation
The Statement 2.0 includes significant tax reforms to enhance Hong Kong’s competitiveness:
- Stamp duty exemption for transfers of all ETFs listed on the Hong Kong Stock Exchange—including tokenized ETFs
- Proposed legislative changes to extend profits tax exemption to qualifying transactions involving specified digital assets within private funds and family investment holding vehicles (effective from the 2025/26 tax year if approved)
These incentives reduce friction for institutional investors and align Hong Kong with leading financial centers embracing digital finance.
Frequently Asked Questions (FAQ)
Q: What is the main goal of Hong Kong’s Digital Asset Policy Statement 2.0?
A: The primary objective is to strengthen Hong Kong’s position as a global leader in digital finance by enhancing regulatory clarity, expanding tokenized product offerings, promoting real-world applications, and fostering talent development.
Q: How does Hong Kong regulate stablecoins?
A: Under the Stablecoin Ordinance effective August 1, 2025, issuers must meet strict requirements for reserve backing, redemption mechanisms, risk management, and ongoing supervision—primarily overseen by the HKMA.
Q: Are profits from cryptocurrency investments taxed in Hong Kong?
A: No—capital gains from long-term holdings are not subject to profits tax. However, income from crypto-related business activities (e.g., trading, mining) is taxable.
Q: Can retail investors trade crypto derivatives in Hong Kong?
A: Currently, only professional investors are permitted to trade crypto derivatives on licensed platforms. The SFC continues to assess risks before extending access to retail users.
Q: What is the Ensemble Project?
A: Led by the HKMA, Ensemble explores blockchain-based financial infrastructure using wCBDC to enable efficient interbank settlement in tokenized money—supporting broader adoption of tokenized assets.
Q: Will tokenized real estate be allowed under this policy?
A: While not explicitly mentioned, the push for real-world asset (RWA) tokenization includes property-like assets. Regulatory clarity on ownership rights and custody will be key before full-scale rollout.
Future Outlook
While the Statement 2.0 is non-binding, it sends a powerful signal: Hong Kong is doubling down on its pro-innovation stance in digital finance. By harmonizing regulation, expanding product diversity, enabling practical use cases, and offering favorable tax treatment, the city is building a resilient ecosystem that bridges traditional finance with blockchain innovation.
With strong government backing, collaboration between regulators and industry, and growing international interest, Hong Kong is well-positioned to become a leading gateway for digital asset adoption in Asia—and globally.
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