Hong Kong Releases New Version of Digital Asset Development Policy Declaration

The Hong Kong Special Administrative Region Government recently announced the "Hong Kong Digital Asset Development Policy Declaration 2.0," reiterating its commitment to making Hong Kong a global digital asset innovation center. This new version of the policy declaration has been further improved based on the first version released in October 2022.

The "Policy Declaration 2.0" outlines the vision for Hong Kong to build a trustworthy and innovation-focused digital asset ecosystem. The policy prioritizes risk management and investor protection while aiming to create substantial value for the real economy and financial markets. The new version of the policy declaration introduces the "LEAP" framework, which mainly includes the following aspects:

Legal and Regulatory Optimization

The government is building 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 and Futures Commission will become the main regulatory authority for digital asset trading and custodial service providers. At the same time, the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority will lead a comprehensive legal review to facilitate the tokenization of physical assets and financial instruments.

Expansion of Tokenized Product Types

The government plans to regularize the issuance of tokenized government bonds and provide incentives for the tokenization of physical assets to enhance liquidity and popularity. The government supports the future trading of related tokenized exchange-traded funds on licensed digital asset trading platforms in the secondary market. Additionally, the government will promote the wider tokenization of assets and financial instruments, showcasing the technology's potential applications in various fields such as precious metals, non-ferrous metals, and renewable energy.

Application Scenarios Advancement and Cross-Industry Cooperation

The stablecoin issuer licensing mechanism will be implemented on August 1, which will help promote the development of practical application scenarios. The government is committed to strengthening cooperation between regulatory agencies, law enforcement agencies, and technology providers to develop digital asset infrastructure. The government welcomes market participants to propose suggestions on how to experiment with and use licensed stablecoins. Cyberport will launch a blockchain and digital asset pilot funding program to provide financial support for projects with development potential and market influence.

Talent and Partner Development

The government will collaborate with the industry and academia to promote talent development and position Hong Kong as a center for digital asset knowledge sharing and international cooperation. This includes joint research programs and global regulatory collaboration. The government will also establish a sustainable talent pool by nurturing a new generation of entrepreneurs, researchers, and technology experts.

The Secretary for Financial Services and the Treasury, Chen Maobo, stated that digital assets are an important and highly promising area in financial technology. Through blockchain technology, more efficient and low-cost financial transactions can be achieved, making financial services more inclusive. The "Policy Declaration 2.0" showcases Hong Kong's vision for the development of digital assets and demonstrates the practical application of tokenization through practice, promoting the diversification of application scenarios.

The Secretary for Financial Services and the Treasury, Hui Chengyu, pointed out that Hong Kong's unique advantages position it to take the lead in transitioning traditional finance to the digital asset era. The framework established by the "Policy Declaration 2.0" will help Hong Kong achieve "LEAP" and create a trustworthy, sustainable digital asset ecosystem that is deeply integrated with the real economy.

The Financial Services and the Treasury Bureau and the Securities and Futures Commission are about to conduct a public consultation on the licensing mechanism for digital asset trading service providers and digital asset custody service providers.