Hong Kong Unveils Policy 2.0 to Boost Digital Asset Ecosystem

China Hong Kong has released a second policy statement aimed at accelerating its digital asset (DA) development and reinforcing its ambition to become a global leader in financial innovation. The latest statement, dated June 26 and dubbed “Policy Statement 2.0,” expands on the framework laid out in its initial release from October 2022. According to the government, the updated strategy creates a vision for a “trusted and innovative digital asset ecosystem” that balances growth with risk management and investor protection. The focus remains on driving real-world financial benefits while nurturing a dynamic, regulatory, and innovation-friendly environment.

Paul Chan, the Financial Secretary, emphasized the region's commitment to building a flourishing DA ecosystem. He stated, “We strive to build a more flourishing DA ecosystem which will integrate the real economy with social life through a prudent regulatory regime and encouragement to market innovation, such that it will bring benefits to both the economy and society while consolidating China Hong Kong’s leading position as an international financial centre.”

At the core of the policy is a new LEAP framework. This acronym stands for Legal and regulatory streamlining, Expanding tokenized products, Advancing use cases and cross-sectoral collaboration, and promoting people and partnership development. One key development is the ongoing creation of a unified regulatory regime for digital asset service providers. The framework will cover crypto exchanges, stablecoin issuers, digital asset dealers, and custodians. The Securities and Futures Commission (SFC) will lead the licensing efforts, ensuring market participants meet strict standards.

In parallel, the Financial Services and Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) will oversee a legal review to support the tokenization of real-world assets. This includes efforts to ease regulatory hurdles in settlement, record-keeping, and registration for tokenized bonds and other instruments. The policy also outlines incentives for tokenizing assets such as government bonds, precious metals, and renewable energy instruments. These efforts aim to boost liquidity and investor access. Measures under consideration include favorable tax treatment for tokenized exchange-traded funds (ETFs).

The government will push for more real-world use cases, especially for stablecoins, to encourage broader adoption within the upcoming licensing structure. The authorities also plan to improve collaboration across sectors by engaging regulators, law enforcement, and tech firms. Finally, the statement emphasizes the importance of talent development. New partnerships between the digital asset industry and academic institutions will help build the skills to support long-term innovation and market maturity.

This comprehensive approach by China Hong Kong underscores its commitment to fostering a robust digital asset ecosystem. By streamlining regulations, expanding tokenized products, and promoting cross-sectoral collaboration, the region aims to lead the way in financial innovation while ensuring a balanced approach to risk management and investor protection. The focus on real-world use cases and talent development further solidifies China Hong Kong’s position as a global leader in the digital asset space.