Hong Kong’s Financial Services and the Treasury Bureau (FSTB) has issued an updated policy statement setting out the Hong Kong government’s approach to the development of digital assets.

The statement outlines a strategy aimed at integrating digital assets into the city’s financial system and broader economy, while maintaining regulatory standards, financial stability, and investor protection.

This second policy statement builds on the framework introduced in 2022, introducing a structured plan to support digital asset activities across legal, product, operational, and talent development areas.

The Government will implement a unified regulatory regime covering digital asset exchanges, stablecoin issuers, dealing and custodian service providers.

The Securities and Futures Commission (SFC) will be responsible for licensing non-bank entities, while the Hong Kong Monetary Authority (HKMA) will oversee digital asset-related banking activities.

A consultation on the licensing regimes for dealers and custodians will be launched to address requirements for liquidity, large-volume trading, and asset safekeeping.

A legal review will focus on tokenisation, beginning with the bond market.

The aim is to provide legal certainty around tokenised bond issuance, particularly regarding settlement and registration, with future expansion to other financial instruments and real-world assets.

The Government plans to continue issuing tokenised green bonds, expanding into new currencies and structures.

It will also promote tokenisation of other financial and physical assets, such as money market funds and commodities.

Existing stamp duty waivers for ETF transfers will be clarified to apply to tokenised ETFs, and proposals will be submitted to include digital assets in the scope of tax concessions for privately offered funds and family offices.

Stablecoin regulation will take effect on 1 August 2025.

The regime will set requirements for reserve management and redemption mechanisms.

The Government will invite proposals for stablecoin use in areas such as public payments.

Financial Secretary, Paul Chan, said,

“The Policy Statement 2.0 sets out our vision for digital asset development and showcases the practical use of tokenisation through application, with a view to boosting the diversification of use cases. We strive to build a more flourishing digital asset 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 Hong Kong’s leading position as an international financial centre.”

Cyberport will support tokenisation initiatives by offering funding and technical assistance to startups, and will coordinate with stakeholders on implementation.

InvestHK will assist new market entrants with business establishment and engagement with financial institutions and professional service providers.

Infrastructure development will be supported through the promotion of regulatory and cybersecurity tools with local presence.

The Government also supports continued development of indices for digital assets by the Hong Kong Exchanges and Clearing Limited.

Training and talent development will continue in collaboration with the private sector and universities.

These efforts will aim to support workforce readiness in areas such as blockchain, AI, and financial technology. Academic-industry partnerships will be encouraged to link research with practical application.

The Government will also expand international cooperation through regulatory coordination and memoranda of understanding with overseas agencies.

Featured image credit: Edited by Fintech News Hong Kong, based on image by peshkovagalina via Freepik