Hong Kong Launches New Policies for Digital Asset Development to Build a Global Innovation Hub

The Hong Kong Special Administrative Region Government released the "Hong Kong Digital Asset Development Policy Declaration 2.0" on June 26, further clarifying its strategic goal of making Hong Kong a global innovation center for digital assets. This latest policy declaration builds on the first declaration released in October 2022 and presents a more comprehensive and specific development framework.

The new policy is centered around "LEAP" and focuses on four aspects: legal and regulatory optimization, expansion of tokenized product types, advancement of application scenarios and cross-industry cooperation, as well as talent and partner development. The government emphasizes that it will promote digital assets to create value for the real economy and financial markets based on risk management and investor protection.

In terms of legal regulation, the government is constructing a unified and comprehensive regulatory framework for digital asset service providers. This framework will cover multiple areas such as digital asset trading platforms, stablecoin issuers, trading service providers, and custodial service providers. The Securities and Futures Commission will become the main regulatory body for digital asset trading and custodial service providers. At the same time, the government will also conduct a comprehensive review of existing laws to promote the tokenization process of physical assets and financial instruments.

To expand the variety of tokenized products, the government plans to regularize the issuance of tokenized government bonds and provide incentives for the tokenization of physical assets. The government also supports the trading of tokenized exchange-traded funds on licensed digital asset trading platforms for secondary market transactions. In addition, the government will promote broader asset tokenization, covering multiple fields such as precious metals, non-ferrous metals, and renewable energy.

In terms of advancing application scenarios, the stablecoin issuer licensing mechanism will officially be implemented on August 1. The government encourages market participants to propose suggestions on how to experiment with and use licensed stablecoins. Cyberport will also launch a blockchain and digital asset pilot funding program to provide financial support for projects with potential and impact.

In terms of talent development, the government will collaborate with industry and academia to cultivate a new generation of entrepreneurs, researchers, and technical experts, establishing a sustainable talent pool. At the same time, Hong Kong will be positioned as an excellent center for digital asset knowledge sharing and international cooperation, promoting joint research programs and global regulatory collaboration.

The Financial Secretary, Paul Chan, stated that digital assets are an important component of financial technology and have significant growth potential. The new policy aims to build a prosperous digital asset ecosystem through robust regulation and innovation encouragement, bringing benefits to the economy and society while consolidating Hong Kong's leading position as an international financial center.

The Secretary for Financial Services and the Treasury, Xu Zhengyu, emphasized that Hong Kong has unique advantages in promoting the transition of traditional finance to the digital asset era. The new policy provides a clear roadmap for enterprises and investors, helping them seize opportunities in a robust and thriving digital asset market.

The government will conduct public consultations on the licensing mechanism for digital asset trading service providers and custodial service providers to further improve the relevant policy framework.