Hong Kong has solidified its ambition to become a global hub for digital asset innovation with the release of its updated Policy Declaration on Digital Asset Development 2.0. This new version, published in June 2025, moves beyond the foundational framework established in the 2022 declaration and introduces detailed measures to deepen the ecosystem and broaden its applications. The shift signifies a strategic evolution from exploratory guidance to systematic deployment, highlighting Hong Kong’s commitment to enhancing its global competitiveness and advancing the institutionalization of digital finance.
From “Virtual Assets” to “Digital Assets”: A Strategic Rebrand
One of the most noticeable changes in Declaration 2.0 is the official transition in terminology from “virtual assets” to “digital assets.” This is not merely a semantic update but reflects a significant broadening of regulatory scope and strategic focus. While “virtual assets” primarily referred to native on-chain assets like cryptocurrencies, “digital assets” encompasses a wider range, including stablecoins and the tokenization of real-world assets (RWA).
This shift aligns Hong Kong with international standards and underscores the regulatory embrace of asset digitization. It positions blockchain technology as a vital tool for modernizing traditional finance, bridging the gap between digital and physical economies. The declaration emphasizes fostering innovation within a risk-controlled environment to deliver tangible benefits to the real economy and financial markets.
Stablecoins and RWA: Core Pillars of the New Strategy
Stablecoins and tokenized real-world assets form the core of Hong Kong’s updated strategy. The Hong Kong Monetary Authority (HKMA) initially introduced a discussion paper on stablecoin regulation two years ago. Declaration 2.0 now confirms that a licensing regime for stablecoin issuers will take effect in August 2025, making Hong Kong one of the first jurisdictions in the Asia-Pacific region to implement such a framework.
Similarly, RWA tokenization has evolved from experimental projects to a central strategic focus. Early pilot programs, like the tokenized green bond issuance, served as proof-of-concept. The new policy aims to institutionalize tokenized government bonds and expand into assets like commodities, gold, and green energy resources. This transition from exploration to integration indicates Hong Kong’s intent to merge traditional and digital finance through regulatory innovation.
To support this, the government will review existing legal frameworks to clarify property rights and the legal status of smart contracts involving tokenized assets. These steps affirm that digital assets are no longer experimental but integral to the future of finance.
Enhanced Regulatory Frameworks: Trading and Custody Services
The first policy declaration established a licensing system for virtual asset trading platforms. Declaration 2.0 expands this to include digital asset trading and custody service providers, aiming for comprehensive regulatory coverage. This move is designed to close loopholes, prevent regulatory arbitrage, and ensure consistent investor protection and market transparency across all service types.
Custody services, in particular, receive heightened attention. Previously, custody was only loosely regulated under exchange asset segregation guidelines. The new approach introduces detailed requirements for technical standards, asset safety, insurance coverage, and compensation capabilities. These measures are critical for attracting institutional investors—such as hedge funds and family offices—who require robust, independent custody solutions before entering the digital asset space.
Tax Incentives to Boost Market Competitiveness
Declaration 2.0 introduces tax incentives to enhance Hong Kong’s appeal as a digital asset hub. Once enacted, tokenized ETFs will enjoy the same stamp duty exemptions as traditional ETFs, and capital gains from investments in digital asset funds will be tax-exempt. These measures establish a level playing field between digital and traditional financial products, encouraging local product innovation and attracting global capital.
Unlike the 2022 declaration, which mentioned no concrete tax benefits, the current policy uses fiscal tools to stimulate market growth. This represents a shift from principle to practice, aligning regulatory goals with economic incentives.
Frequently Asked Questions
What is the difference between virtual assets and digital assets?
Digital assets include a broader range of instruments than virtual assets. While virtual assets typically refer to cryptocurrencies and native blockchain tokens, digital assets also encompass tokenized real-world assets like commodities, bonds, and stablecoins. This change reflects Hong Kong’s broader regulatory and economic vision.
How will stablecoins be regulated under the new policy?
The HKMA will implement a licensing regime for stablecoin issuers starting August 2025. This framework will set out operational, reserve, and disclosure requirements to ensure stability and protect investors.
What types of assets can be tokenized in Hong Kong?
The government plans to expand tokenization beyond green bonds to include gold, energy assets, electric vehicle-related assets, and other commodities. The goal is to integrate a wide range of real-world assets into the digital ecosystem.
Are there benefits for investors in digital assets?
Yes. The proposed tax exemptions for tokenized ETFs and digital asset funds aim to reduce investment costs and improve returns. These incentives make Hong Kong an attractive destination for digital asset investments. For those looking to explore investment options, you can review current market offerings.
How does the new policy affect custody service providers?
Custody providers will need to apply for licenses and comply with enhanced technical and financial requirements. These include safeguards for asset security, insurance mandates, and risk management protocols.
What is the overall goal of Policy Declaration 2.0?
The declaration aims to position Hong Kong as a leading global digital asset hub by combining regulatory clarity, institutional safeguards, and economic incentives. It focuses on merging digital and traditional finance to drive sustainable growth.
Conclusion: From Regional Testing Ground to Global Leader
Hong Kong’s digital asset policy has evolved from building a basic framework to creating a detailed, application-oriented ecosystem. Declaration 2.0 demonstrates a clear regulatory philosophy: gradual but decisive progress supported by pilots and stakeholder feedback. The focus on RWA, stablecoins, and custody services reflects a mature approach to market development.
The success of these measures will depend on effective implementation, regulatory agility, and infrastructure readiness. If executed well, Hong Kong could transition from a regional testing ground to a global standard-setter in the digital asset space. For professionals and investors eager to stay ahead, access in-depth analysis and tools to navigate this evolving landscape.