Hong Kong Launches Digital Asset Development Policy 2.0, Focusing on Stablecoins and Tokenization of Physical Assets

The Hong Kong SAR government released the "Hong Kong Digital Asset Development Policy Declaration 2.0" on June 26, detailing the measures from the first policy declaration issued in October 2022. The new policy places greater emphasis on practical applications and ecosystem development, reiterating the government's commitment to making Hong Kong a global innovation center for digital assets.

The "Policy Declaration 2.0" proposes the "LEAP" framework, focusing on four key directions:

1. Optimize laws and regulations: Establish a unified and comprehensive regulatory framework for digital asset service providers, covering trading platforms, stablecoin issuers, trading service providers, and custodial service providers. The Securities Regulatory Commission will become the main regulatory body, responsible for the future licensing mechanism.

2. Expand the types of tokenization products: Regularize the issuance of tokenized government bonds and provide incentives for the tokenization of physical assets. The government supports tokenized exchange-traded funds to be traded in the secondary market through licensed digital asset trading platforms and promotes broader tokenization of assets and financial instruments.

3. Promote application scenarios and cross-border cooperation: The stablecoin issuer licensing mechanism will be implemented on August 1, which will help advance the development of substantial application scenarios. 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 center for digital asset knowledge sharing and international cooperation.

Cyberport launched the "Blockchain and Digital Asset Pilot Funding Scheme," covering multiple areas, including tokenization of physical assets, stablecoins and payment solutions, decentralized identity, and more. Each eligible project can receive up to HKD 500,000 in funding.

Industry experts believe that the "Policy Declaration 2.0" is an institutional upgrade, systematically promoting compliance regulation, asset tokenization, scenario expansion, and talent development across the four dimensions of the "LEAP" strategic framework. Key changes include:

1. Stablecoins will be regulated, and the licensing system will be officially implemented on August 1, 2025.
2. The tokenization of physical assets is regarded as a key industry, with the government promoting the normalization of bond issuance and planning to include gold, green energy, and other assets in the scope of tokenization.
3. Tokenized ETFs and digital asset funds are expected to enjoy tax exemptions.

Stablecoins are evolving from "tool-type currency" to "infrastructure currency". Hong Kong's regulatory design has set rules for stablecoin issuers regarding statutory reserve management, redemption mechanisms, and risk prudential requirements, making stablecoins a currency that can be accepted by banks, cross-border settlement systems, and the public sector, possessing both statutory and technical attributes.

Recently, several institutions have launched stablecoin and physical asset tokenization projects in Hong Kong. For example, a certain company collaborated with a tech company to participate in China's first green energy exchange asset RWA project, promoting the application of physical assets in Hong Kong. Many tech companies and financial institutions are also exploring the application for stablecoin licenses in Hong Kong.

In terms of regulatory compliance, more than 40 institutions in Hong Kong have upgraded their relevant licenses. The Securities and Futures Commission adopts the principle of "same business, same risk, same regulation" for the regulation of virtual assets, adding conditions and technical specifications for virtual asset business on top of traditional financial licenses. Currently, 11 virtual asset trading platforms have obtained formal licenses, and several brokerages are actively applying for the upgrade of licenses related to virtual asset trading.

Overall, the launch of the "Policy Declaration 2.0" marks significant progress for Hong Kong in the development path of digital assets. With an increasingly clear regulatory framework, the gradual implementation of tokenized products, and active participation from institutions, Hong Kong is accelerating the construction of a robust, diverse, and sustainable digital asset ecosystem. The tokenization of physical assets and stablecoins may become key growth areas in the next stage.