Compiled by: KarenZ, Foresight News
Original Title: Key Highlights! What Does the Hong Kong Digital Asset Development Policy Declaration 2.0 Say?
On June 26, the Hong Kong Special Administrative Region government released the "Hong Kong Digital Asset Development Policy Declaration 2.0" (hereinafter referred to as "Policy Declaration 2.0"), dedicated to focusing on enhancing digital asset trading liquidity, promoting more diverse digital asset product offerings, empowering industry development, promoting inclusive finance, cultivating talent, and thereby strengthening Hong Kong's position as a global digital asset center.
This "Policy Declaration 2.0" is the next stage of development following the Hong Kong Securities and Futures Commission's "ASPIRe" roadmap released in February this year. (The "ASPIRe" roadmap covers a new regulatory framework for virtual asset over-the-counter trading and virtual asset custody services, and will also promote the expansion of virtual asset products and services.)
TL;DR
1. Proposed the "LEAP" framework, which includes optimizing legal and regulatory aspects, expanding tokenized product types, advancing digital asset (including stablecoin) application scenarios and cross-sector collaboration, and developing talent and partnerships.
2. The Hong Kong Financial Secretary and Securities and Futures Commission will soon conduct public consultation on licensing mechanisms for digital asset trading service providers and digital asset custody service providers.
3. The Securities and Futures Commission will be the primary regulatory body for digital asset trading service providers and custody service providers, responsible for licensing and registration, setting standards, and optimizing regulatory processes.
4. The Hong Kong Monetary Authority, as the front-line supervisor of banks, will oversee their digital asset trading and custody activities.
5. The Hong Kong government will standardize tokenized government bond issuance in the future and will also promote tokenization applications in different fields such as precious metals (like gold), non-ferrous metals, and renewable energy.
6. The stamp duty exemption measure for ETF transfers listed on the Hong Kong Stock Exchange will also apply to tokenized ETFs.
7. Hong Kong will implement a stablecoin issuer regulatory system starting from August 1, 2025. Market participants are welcome to suggest how the government can experiment with and use licensed stablecoins.
8. Cyberport will assist the government in building a stable professional talent pool.
Here are the key points of the "Policy Declaration 2.0":
The policy proposes the "LEAP" framework, dedicated to forming a trustworthy, sustainable digital asset ecosystem deeply integrated with the real economy. Specifically including:
One, Legal and Regulatory Streamlining
1. Unified and comprehensive regulatory framework: covering digital asset exchanges, stablecoin issuers, digital asset trading service providers, and custody service providers, with a focus on investor and consumer protection.
The next main step is to conduct public consultation on the licensing mechanism for digital asset trading service providers and digital asset custody service providers.
The Hong Kong SAR government suggests designating the Securities and Futures Commission as the primary regulatory body for digital asset trading service providers and custody service providers, responsible for licensing and registration, setting standards, and optimizing regulatory processes.
The Hong Kong Monetary Authority, as the front-line supervisor of banks, will oversee their digital asset trading and custody activities.
Hong Kong will continue to implement international standards related to digital assets, including the International Organization of Securities Commissions' "Policy Recommendations for Crypto and Digital Assets", the Financial Stability Board's "Global Crypto-Asset Regulatory Framework", the Basel Committee on Banking Supervision's "Prudential Treatment of Crypto-Asset Exposures", and the OECD's "Crypto-Asset Reporting Framework" to promote tax transparency.
2. Tokenization legal and regulatory review: The Financial Secretary and Monetary Authority will lead a review of relevant legal and regulatory frameworks, reference international experience, and promote further tokenization applications in Hong Kong. Initially focusing on the bond market that has passed the proof of concept stage, they will comprehensively review tokenized bond issuance and trading processes, including but not limited to settlement, registration, and record requirements.
Two, Expanding the Suite of Tokenised Products
1. Standardizing tokenized government bond issuance: The government has previously issued tokenized green bonds totaling approximately 6.8 billion Hong Kong dollars and will standardize tokenized government bond issuance in the future.
2. Promoting tokenization of real-world assets and financial assets:
Through the Monetary Authority's Ensemble project, encouraging innovative application scenarios, including tokenization of traditional financial products (such as money market funds and other funds) and real-world asset revenue streams. The Monetary Authority is exploring establishing Ensemble infrastructure to facilitate settlement of tokenized deposits between banks, simplifying processes and enhancing liquidity.
The London Metal Exchange has included Hong Kong in its global warehouse network licensed delivery locations. The government encourages market application of tokenization and physical asset tracking technologies in warehouse plans.
The government will intensify efforts to expand tokenization schemes, promoting applications in different fields such as precious metals (like gold), non-ferrous metals, and renewable energy (like solar panels).
Clarifying that the stamp duty exemption measure for transfers of all ETFs listed on the Hong Kong Stock Exchange also applies to tokenized ETFs.
The government will submit legislative proposals to include specified digital assets in qualifying transactions eligible for 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.
Three, Advancing Use Cases and Cross-Sectoral Collaboration
1. Supporting stablecoins and other tokenization projects, including exploring stablecoins as payment tools: Hong Kong will implement a stablecoin issuer regulatory system starting from August 1, 2025. The system sets requirements for reserve asset management, stabilization mechanisms, redemption processes, and prudent risk management, promoting research and implementation of application scenarios by Hong Kong-licensed stablecoin issuers. Market participants are welcome to suggest how the government can experiment with and use licensed stablecoins.
2. Promoting cooperation among regulatory bodies, law enforcement agencies, and technology providers: Hong Kong Cyberport will collaborate with relevant digital asset industry stakeholders, utilizing its incubation ecosystem to provide support, including business matching opportunities, technical support, industry expert guidance, and participation in digital asset and Web3 accelerator programs. Cyberport will also launch a blockchain and digital asset pilot funding program to provide funding and assistance for applications with future potential, landmark significance, and market impact.
3. Invest Hong Kong is prepared to support digital asset service providers in establishing and expanding their businesses in Hong Kong.
4. Hong Kong Exchanges and Clearing Limited has launched Hong Kong's first digital asset indices, providing transparent and reliable Bitcoin and Ethereum price benchmarks for investors in the Asian time zone.
5. Encouraging digital asset infrastructure development, including but not limited to various regulatory technology, cybersecurity, and monitoring solutions with local experience and deep regional expertise. The government will promote collaboration between technology providers, regulators, and law enforcement agencies.
Four, People and Partnership Development
1. Continuing to encourage training and talent development in the digital asset industry, with a special focus on blockchain applications, AI integration, and digital asset innovation. Next, Cyberport will assist the government in building a stable professional talent pool through relevant measures.
2. The government will promote strategic cooperation between universities and the industry, connecting academic research with practical applications in the digital asset field. Joint research programs will focus on developing new blockchain applications, tokenization frameworks, monitoring, and AI-driven financial instruments.
3. The government will strengthen cooperation between regulatory and law enforcement agencies, coordinate the work of local regulatory and law enforcement agencies, support the development of a transparent, secure, and resilient digital asset market, and will also collaborate with regulatory agencies to support and participate in international cooperation.
