Key Takeaways
- The Hong Kong administration has released a second policy statement outlining its plans to support the expansion of RWA tokenization and its crypto licensing regime.
- The city-state aims to offer clarity regarding tax duties for tokenized ETFs and support secondary market trading for such tokens.
- The region recently introduced a licensing regime for stablecoin issuers, which is scheduled to take full effect on August 1.
The Hong Kong Special Administrative Regional Government has released a new policy statement on digital asset development.
According to a report in the HK Standard, the new policy statement on digital asset development is designed to strengthen the administration’s desire to become a regional and global cryptocurrency hub.
A Vibrant Digital Asset Environment
Dubbed the “Hong Kong Digital Asset Development Policy Declaration 2.0,” the second policy declaration builds upon initiatives outlined in the initial declaration from October 2022. Financial Secretary Paul Chan stated that “Policy Declaration 2.0” reflected the government’s vision for digital asset development and demonstrated the practical application of tokenization, aiming to diversify application scenarios.
By integrating a robust regulatory regime and encouraging high-level market innovation, Hong Kong aims to create a vibrant digital asset environment that combines with the real economy and social life, benefiting both the economy and society. This approach also aims to strengthen Hong Kong’s position as a leading international financial center. Paul Chan stated:
“[Through] blockchain technology, more efficient financial transactions at a lower cost can be realized to bring in more inclusive financial services […] the Policy Statement 2.0 sets out our vision for DA development and showcases the practical use of tokenization through application, to boost the diversification of use cases.”
Streamline Existing Legal and Regulatory Frameworks
The new policy statement on digital asset development outlines the government’s plans to streamline the existing legal and regulatory frameworks for crypto asset service providers by establishing a comprehensive regulatory system targeting digital asset exchanges, stablecoin issuers, dealing service providers, and custodians.
Under the proposed policy, Hong Kong’s Securities and Futures Commission (SFC) will be the primary authority for upcoming licensing regimes for digital asset dealers and custodians. On the other hand, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority will be responsible for conducting a legal review that facilitates the real-world tokenization of assets.
Conduct Public Consultations
Hong Kong aims to promote further the tokenization of a wide range of assets across various sectors, including precious metals, non-ferrous metals, and renewable energy. The government seeks to enhance use cases and cross-sector collaboration by promoting cooperation among regulators, law enforcement agencies, and technology providers in the development of digital asset infrastructures. According to the statement, both FSTB and the SFC will conduct public consultations on the licensing regimes for digital asset dealing service providers and custodians shortly. Commenting on the development, Eugene Cheung, chief commercial officer of OSL Group, said:
“The Hong Kong government’s commitment to advancing real-world asset (RWA) tokenization through cross-departmental collaboration is a significant step toward establishing the city as a global leader in digital asset innovation.”
Conclusion
The new statement policy on digital asset development builds upon the foundation of the 2022 policy. While Hong Kong is actively pushing its pro-crypto policies, it faces competition from other jurisdictions that are also developing their regulatory frameworks for virtual assets. Hong Kong is also looking to expand its crypto offerings, including potentially allowing crypto derivatives trading for professional investors and exploring the potential of virtual asset ETFs.
Frequently Asked Questions
What is the Hong Kong crypto regulatory status?
Hong Kong introduced its virtual asset licensing regime in 2023, which requires cryptocurrency firms with an official presence in the city to apply for licenses and meet specific standards and requirements to offer digital assets to retail investors in the city.
Is Hong Kong crypto tax-free?
Hong Kong taxes residents on a territorial basis and does not impose a capital gains tax. If your crypto transactions are considered long-term investments, you may not owe anything.
Is Hong Kong crypto-friendly?
Hong Kong is regarded as one of the world’s leading cryptocurrency hubs, surpassing several global financial centers, including Singapore and Abu Dhabi, to rank second in the newly released Crypto Friendly Cities Index 2025.
