Original Title: Hong Kong Declaration at a Glance: Aiming to Replace Singapore as the Crypto Center in Asia-Pacific?
Original Author: Wu Blockchain
On June 26, the Hong Kong Special Administrative Region government released the "Hong Kong Digital Asset Development Policy Declaration 2.0", stating its firm commitment to building Hong Kong into a global leading digital asset center - a market with controllable risks that allows innovation to thrive and brings substantial benefits to the real economy and financial markets.
The release of this Hong Kong declaration comes at a time when Singapore is issuing strict policies to drive out unlicensed institutions. Legend Trading CEO Hao stated that in the next 2-3 years, Singapore's influence on the Web3 industry will continue to diminish. With only 33 licensed companies, approximately half of these have little competitiveness outside Singapore. Some are merely subsidiaries of large groups, with licenses only allowing services to the Singapore market and limited to spot trading. Many company founders will remain in Singapore for family life, but teams will be placed in other countries. Renowned analyst Zheng Di said that the next Web3 center will be Hong Kong, and he is very optimistic about Hong Kong. Singapore suffered massive losses from Temasek's investment in FTX, and many people coming from Singapore have no need for the crypto space. Hong Kong will reclaim its position as the global Web3 center due to Singapore's actions.
The Hong Kong declaration states that to achieve this vision and goal of creating a digital asset ecosystem deeply integrated with the real economy and financial markets, it will propose a series of strategic policy directions and implement corresponding measures. When formulating policy directions and measures, they will ensure they are not limited by current technology and can adapt to the future development of digital assets while integrating into the real economy and financial system to achieve sustainable growth. These measures are framed by "LEAP": Legal and regulatory streamlining, Expanding the suite of tokenized products, Advancing use cases and cross-sectoral collaboration, and People and partnership development, to create a trustworthy, innovative, and vibrant digital asset ecosystem that strengthens Hong Kong's leading position in the global financial landscape.
The declaration indicates that the next key step is to conduct public consultation on licensing mechanisms for digital asset trading service providers and digital asset custody service providers to meet investors' needs for high liquidity, bulk transactions, and secure asset custody. The government suggests that the Securities and Futures Commission (SFC) will be the primary regulatory body for digital asset trading service providers, responsible for licensing, registration, standard setting, and optimizing regulatory processes to reduce potential regulatory arbitrage across different digital asset regulatory frameworks. The Hong Kong Monetary Authority (HKMA) will serve as the front-line supervisory authority for banks, overseeing their digital asset trading activities. The SFC will be the primary regulatory body for digital asset custody service providers, responsible for licensing, registration, and standard setting, while the HKMA will oversee banks' digital asset custody activities.
The declaration states that the Financial Services and the Treasury Bureau (FSTB) and HKMA will lead the review of relevant legal and regulatory frameworks, referencing international experiences and practices to promote tokenization in Hong Kong. The initial review will focus on the bond market that has passed the proof of concept stage, with hopes of providing references for tokenization of other real-world assets and financial instruments. They will comprehensively review tokenized bond issuance and trading processes, including but not limited to settlement, registration, and record-keeping requirements. The government will normalize tokenized government bond issuance and explore different currency and tenure arrangements and other innovative options. The government expects to provide stable and high-quality digital bonds to the market, further expanding accessibility and attracting a broader investor base. To further leverage tokenization advantages, the FSTB and HKMA will continue communicating with industry experts to understand market perspectives, including incorporating digital currencies to enhance trading efficiency, secondary market trading use cases, and expanding investor participation in the local bond market. The government aims to set a global benchmark by pioneering and normalizing tokenized bond issuance, enhancing market confidence in the technology, and encouraging adoption by public and private sectors.
The declaration states that currently, all exchange-traded funds (ETFs) listed on the Hong Kong Stock Exchange are exempt from stamp duty during transfer. To promote the digital asset market, the government will clarify that this stamp duty exemption also applies to tokenized ETFs. On this exemption basis, the government welcomes market participants to explore tokenized ETF advantages, such as money market ETFs, including introducing them to licensed digital asset trading platforms or other platforms for secondary market trading. Looking forward, the government will maintain an open attitude and review tax arrangements for transfers of other SFC-recognized funds after tokenization, considering fiscal impacts and market development. The government will submit legislative proposals to include specified digital assets in qualifying transactions enjoying profits tax exemption for privately offered funds and family investment control tools. If the proposal is passed by the Legislative Council, the tax exemption will take effect from the 2025/2026 tax year.
The declaration states that it will support stablecoins and other tokenization projects, including exploring stablecoins as payment tools. To fully realize stablecoins' potential, the government and regulators will provide a favorable market environment and necessary regulatory guidance, promoting Hong Kong's licensed stablecoin issuers to research and implement solutions for different application scenarios to address substantial pain points in economic activities. To demonstrate government support and take the lead, they welcome market participants to suggest how the government can experiment with and use licensed stablecoins, such as improving government payment efficiency.
The declaration states that Cyberport will launch a blockchain and digital asset pilot funding program, providing funding for projects with future application potential, landmark significance, and market impact. Beyond funding, Cyberport will also assist these companies and coordinate with relevant stakeholders to support pilot project implementation as needed. The government's Investment Promotion Team is ready to support digital asset service providers in establishing and expanding their businesses in Hong Kong. Among the various support options, the Investment Promotion Agency can help potential digital asset service providers connect with banks and different professional and support services and facilitate their business establishment.
National Committee member and Hong Kong Legislative Council member Wu Jiazhuang interpreted that the declaration clearly replaces "virtual assets" with "digital assets" to align with international standards, emphasizing its innovative leadership as an international financial center in the digital era. The goals are very clear: balancing innovation and risk management, attracting high-quality global institutions, and using technologies like tokenization to improve financial market efficiency and serve the real economy. It clearly defines responsibilities, with the SFC leading digital asset trading and custody service licensing, and the HKMA supervising bank-related activities to avoid functional overlap. The declaration shows the government's friendly attitude and recognition of digital assets, with plans to submit legislative proposals to include digital assets in qualifying transactions enjoying profits tax exemption for privately offered funds and family investment control tools. Additionally, the SAR government will proactively normalize tokenized government bond issuance, substantially reduce industry operating costs, and strive to improve market liquidity. The government will clarify how stamp duty exemption measures for ETF transfers will apply to tokenized ETFs, which will have a far-reaching impact on the digital asset industry. With substantial financial support and market ecosystem enhancement, Cyberport will launch a blockchain and digital asset pilot funding program that can attract more talent and improve Hong Kong's overall project portfolio. In summary, Hong Kong has a great chance of becoming the benchmark for compliant and innovative digital assets in Asia within 3-5 years, providing a Hong Kong solution for the integration of traditional finance and the digital economy.
Hong Kong's Financial Secretary Chen Maobo stated: Digital assets are an important and highly promising component of financial technology, enabling more efficient and lower-cost financial transactions through blockchain technology, making financial services more inclusive. The "Policy Declaration 2.0" showcases our vision for digital asset development and demonstrates the substantive application of tokenization through practice, promoting the diversification of application scenarios. By combining prudent regulation and market innovation encouragement, we aim to build a more vibrant digital asset ecosystem that integrates with the real economy and social life, bringing benefits to the economy and society while consolidating Hong Kong's leading position as an international financial center.
Hong Kong's Financial Services and the Treasury Bureau Director Xu Zhengyu said: Hong Kong's unique advantages position us at the forefront of driving traditional finance into the digital asset era. The framework established in the "Policy Declaration 2.0" helps us move towards "LEAP" to form a trustworthy, sustainable digital asset ecosystem deeply integrated with the real economy. The declaration also firmly places Hong Kong at the forefront of digital transformation, providing a clear roadmap for enterprises and investors to navigate in a stable and thriving digital asset market.
In an exclusive interview with Ta Kung Pao, Financial Secretary Chen Maobo emphasized that Hong Kong is developing a comprehensive digital asset ecosystem through four key strategies: optimizing legal and regulatory frameworks, expanding product varieties, promoting application scenario collaborations, and cultivating talent. He stressed that digital assets are not just a breakthrough in financial technology but a crucial lever for consolidating Hong Kong's international financial center status. Hong Kong will advance the integration of virtual assets with the real economy through licensing management and scenario-based applications. "Stablecoin regulation is a priority, and we require its application to be tied to real-world scenarios like trade settlement and cross-border payments, preventing speculation." Currently, Hong Kong has legislated to regulate stablecoin issuance, with the Securities and Futures Commission licensing virtual asset exchanges and advancing custodian regulations, while providing innovation test spaces through "sandbox regulation".
HashKey Group Chairman Xiao Feng told PANews that this declaration has three key changes: stablecoins will be brought under regulation, with a licensing system to be formally implemented on August 1, 2025, making it one of the few jurisdictions globally to provide a "landing pass" for stablecoins; RWA tokenization is viewed as a key industry, with the government not only promoting bond issuance but also planning to include assets like gold, green energy, and electric vehicles; tokenized ETFs and digital asset funds will enjoy tax exemptions. These reforms signal that Hong Kong is not just supporting Web3, but integrating it into financial infrastructure through institutional frameworks. The Web3 policy update completes a "three-in-one" institutional closed loop: regulatory certainty, asset transparency, and tax competitiveness.
