Hong Kong Exempts Tokenized ETFs From Stamp Duty To Boost Digital Asset Market

The Hong Kong Financial Services and the Treasury Bureau released the "Digital Asset Development Policy Declaration 2.0" on June 26, outlining the region's commitment to expanding tokenization schemes. This initiative aims to promote the broader tokenization of assets and financial instruments, showcasing the technology's versatility across various sectors, including precious metals, non-ferrous metals, and renewable energy sources like solar panels.

Currently, all exchange-traded funds (ETFs) listed on the Hong Kong Stock Exchange are exempt from stamp duty during transfers. To foster the growth of the tokenization market, the Hong Kong government has clarified that this exemption will also apply to tokenized ETFs. This move is intended to provide clarity on the stamp duty situation for tokenized ETFs once they are permitted to trade in the secondary market.

The "Policy Declaration 2.0" encourages market participants to explore the benefits of tokenizing ETFs, including the possibility of introducing them for secondary market trading on licensed digital asset trading platforms or other suitable platforms. This policy aims to create a more favorable environment for the development and adoption of tokenized financial instruments, potentially driving innovation and efficiency in the financial sector.

The exemption from stamp duty for tokenized ETFs is a significant step towards integrating digital assets into the traditional financial ecosystem. By removing this barrier, the Hong Kong government hopes to attract more investors and market participants to the tokenization market, thereby enhancing the region's position as a global financial hub. This policy is part of a broader effort to leverage technology to modernize financial services and promote economic growth.