Hong Kong Digital Asset New Policy: Focus on Stablecoins and Tokenization of Physical Assets

The Hong Kong SAR government recently released the "Hong Kong Digital Asset Development Policy Declaration 2.0", which is a further refinement and implementation of the first policy declaration issued in October 2022. The new policy places greater emphasis on practical applications and ecosystem development, reiterating Hong Kong's determination to establish itself as a global innovation center for digital assets.

"LEAP" Framework: Four Key Directions

The new policy proposes the "LEAP" framework, focusing on the following four aspects:

1. Optimize laws and regulations: A comprehensive regulatory framework for digital asset service providers is being built, covering trading platforms, stablecoin issuers, trading service providers, and custodial service providers. The Securities Regulatory Commission will become the main regulatory authority.

2. Expand the variety of tokenization products: The government will promote the regular issuance of tokenized government bonds and provide incentives for the tokenization of physical assets. In the future, it may support the secondary market trading of tokenized exchange-traded funds on licensed digital asset trading platforms.

3. Promote application scenarios and cross-border cooperation: The stablecoin issuer licensing mechanism will be implemented on August 1. The government is committed to strengthening cooperation among regulatory agencies, law enforcement agencies, and technology providers to develop digital asset infrastructure.

4. Talent and Partner Development: The government will collaborate with the industry and academia to promote talent development, positioning Hong Kong as a hub for digital asset knowledge sharing and international cooperation.

Institutional Upgrade: Stablecoins and Tokenization of Physical Assets Become the Focus

The new policy marks a systemic upgrade for Hong Kong in the digital asset sector, mainly reflected in the following aspects:

1. Stablecoins will be regulated: The stablecoin licensing system will officially be implemented on August 1, 2025.

2. Tokenization of physical assets becomes a key industry: The government plans to include bonds, gold, green energy, electric vehicle assets, and more in the scope of tokenization.

3. Tax incentives: Tokenized ETFs and digital asset funds may enjoy the same stamp duty exemptions and capital gains tax exemptions as traditional ETFs.

These measures are expected to promote the evolution of stablecoins from "tool-based currency" to "infrastructure currency", bringing new development opportunities to the digital asset market.

Institutions Actively Deploy

Currently, more than 40 institutions in Hong Kong have been approved to provide virtual asset trading services through comprehensive accounts. These include Guotai Junan International, Tianfeng International, Hafu Securities, Futu Securities (Hong Kong), Interactive Brokers, and others. Several Chinese-funded securities firms are also actively applying for upgrades to their virtual asset-related trading licenses.

Brokerages mainly engage in "distribution" type trading services by establishing comprehensive accounts within licensed exchanges to provide clients with trading channels for mainstream compliant coins. Some exchanges, such as HashKey Exchange, have already offered virtual asset trading, custody, and settlement services to multiple licensed institutions.

Future Outlook

As the regulatory framework becomes increasingly clear, tokenized products gradually take shape, and institutions actively enter the market, Hong Kong is accelerating the construction of a robust, diverse, and sustainable digital asset ecosystem. The tokenization of physical assets and stablecoins are expected to become key growth areas in the next phase, driving further development of Hong Kong's digital asset market.