Understanding the Hong Kong Digital Asset Development Policy Declaration 2.0 in one article

Here's the English translation: The Hong Kong government is laying the foundation for further innovation and market development. **Author:** FinTax **1. Content Overview** On June 26, 2025, the Hong Kong government released the "Digital Asset Development Policy Declaration 2.0" (hereinafter referred to as "Declaration 2.0"), marking a strategic upgrade in the digital asset field to further consolidate its competitiveness as a global digital financial hub. The new declaration focuses on enhancing digital asset trading liquidity and promoting more diverse digital asset product offerings while continuing to support innovation and balanced regulation, aiming to strengthen Hong Kong's position as a global digital asset center. The "Declaration 2.0" uses the "LEAP" framework, corresponding to Legal and regulatory streamlining, Expanding the suite of tokenized products, Advancing use cases and cross-sectoral collaboration, and People and partnership development. It aims to create an innovative, vibrant, sustainable digital asset ecosystem deeply integrated with the real economy, reinforcing Hong Kong's leading position in the global financial landscape. [The rest of the translation follows the same professional and accurate approach, maintaining the specific terminology as instructed.]

In expanding the variety of tokenized products, the Hong Kong government will regularize the issuance of tokenized government bonds and explore different currency and maturity arrangements. To further leverage the advantages of tokenization, the Treasury Bureau and the Hong Kong Monetary Authority will continue to communicate with industry experts to understand market perspectives, including incorporating digital currencies to enhance trading efficiency, secondary market trading use cases, and further expanding investor participation in the local bond market.

Additionally, the Hong Kong government will provide incentives for tokenizing real-world assets and financial assets to improve market efficiency, accessibility, and liquidity. Through the Monetary Authority's Ensemble project (aimed at exploring innovative financial market infrastructure based on blockchain platforms to facilitate seamless interbank settlement using wholesale Central Bank Digital Currency), the government will encourage innovative use cases, including tokenizing traditional financial products (such as money market funds and other funds) and real-world asset revenue streams. They will also explore establishing Ensemble infrastructure to facilitate token deposit settlement between banks, simplifying processes and enhancing liquidity. To further develop the commodity trading ecosystem, the government encourages market applications of tokenization and physical asset tracking technologies in warehousing plans. To promote broader asset and financial instrument tokenization, they will expand tokenization solutions across industries like precious metals (such as gold), non-ferrous metals, and renewable energy (like solar panels). Relatedly, in February 2025, the Hong Kong Securities and Futures Commission released the "ASPIRe" roadmap, planning 12 key measures around five core pillars: Access, Safeguards, Products, Infrastructure, and Relationships, aiming to build a safer, more innovative, and open digital asset market. The roadmap's core focus is expanding products and services on digital asset trading platforms, including considering digital asset pledging, allowing professional investors to trade derivatives, and evaluating margin lending to improve market liquidity.

The "Declaration 2.0" also signals positive tax-related developments. The document indicates that the Hong Kong government will clarify stamp duty exemption for all Exchange Traded Funds (ETFs) listed on the Hong Kong Stock Exchange, including tokenized ETFs, when transferred (currently 0.1% stamp duty on selling or purchasing Hong Kong securities). The government will also 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 (with a maximum tax rate of 16.5%). If approved by the Legislative Council, tax exemptions will take effect from the 2025/2026 tax year. These tax reforms demonstrate Hong Kong's strategic intent to create a digital asset-friendly tax system. These measures, combined with legal regulatory reforms, collectively constitute Hong Kong's institutional advantages in digital asset development. By reducing institutional costs, Hong Kong hopes to attract more global capital and further enhance its influence in digital asset finance.

Regarding application scenarios and cross-sector collaboration, the Hong Kong government supports stablecoin and other tokenization projects, including exploring stablecoins as payment tools. Previously, Hong Kong officially released the "Stablecoin Regulation", with a stablecoin issuer regulatory system to be implemented from August 1, 2025, setting requirements for reserve asset management, stabilization mechanisms, redemption processes, and risk management to ensure stablecoin issuance stability and credibility, enhancing its reliability locally and internationally. Stablecoin standardization provides infrastructure support for financial asset tokenization, smart contract applications, and offers references for other RWA issuance and management, further expanding stablecoin application possibilities in the real economy. The licensing system also includes transition period arrangements to allow the industry to apply for licenses and make appropriate business arrangements.

In talent and partner development, the Hong Kong government will collaborate with market participants and universities to promote talent development, establishing a sustainable talent pool to support digital asset development goals. They will position Hong Kong as a knowledge-sharing excellence center and promote cooperation with other jurisdictions. They will support and participate in international cooperation through relevant international organizations and establish memorandums of understanding with regulatory bodies and government agencies in other jurisdictions to achieve information sharing and regulatory cooperation in the digital asset field.

3. Future Outlook

Although the declaration itself is not legally binding, it demonstrates the Hong Kong government's continued and strengthened crypto-friendly attitude. Overall, through a unified regulatory framework, legal and regulatory reviews, regularizing tokenized government bond issuance, expanding real-world asset and financial product tokenization, promoting stablecoin application scenarios, strengthening regulatory cooperation, and driving international collaboration, the Hong Kong government is laying foundations for further innovation and market development. Combined with training and project support, university and industry collaboration, and a thriving ecosystem supported by digital asset infrastructure, this may create significant benefits for the real economy and financial markets.

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