Hong Kong Rolls Out Blueprint to Cement Role as Global Digital Asset Hub

Hong Kong is intensifying its efforts to become a leading global center for digital assets by unveiling a comprehensive new policy blueprint, the "Policy Statement on Development of Virtual Assets in Hong Kong 2.0." Released by the Financial Services and the Treasury Bureau, this framework creates a unified licensing regime that consolidates regulatory oversight for trading platforms, custodians, stablecoin issuers, and over-the-counter (OTC) service providers. This marks a major evolution from the city’s previous crypto stance, shifting from exploratory support to structured regulatory execution, with the goals of deepening market liquidity, product diversification, and facilitating cross-border applications of digital assets. [para. 1][para. 2][para. 3]

The new policy notably places Hong Kong’s OTC regulatory framework in alignment with global anti-money laundering standards as set by the Financial Action Task Force. According to Deng Chao, CEO of HashKey OTC Global, this harmonization aims to enhance the monitoring of cross-border capital flows and is designed to attract the participation of major institutions and multinational corporations. The statement also guides the legal use of stablecoins in international trade. [para. 4]

Licensing rules for stablecoin issuers are scheduled to take effect from August 1, 2025, underscoring Hong Kong’s commitment to regulating this sector. The new oversight for OTC trading is a direct response to past vulnerabilities exposed by incidents such as the HK$1.6 billion JPEX fraud in 2023, which highlighted risks in unregulated dealings. This regulatory shift aims to reinforce compliant OTC service providers, enhance their competitiveness, and significantly increase the value of their licenses by potentially restricting OTC platforms to trading only licensed stablecoins. [para. 5][para. 6]

Hong Kong’s journey toward structured crypto regulation began with the original policy statement in October 2022, transitioning from skepticism to a framework of structured acceptance. Since then, the city has licensed 11 digital asset platforms and issued tokenized green bonds worth HK$6.8 billion (US$866 million). The new phase expands regulatory oversight to include custodians, OTC providers, and further formalizes the stablecoin regime. [para. 7][para. 8]

Under the revamped framework, the Securities and Futures Commission (SFC) will regulate digital asset custodians and OTC providers, while the Hong Kong Monetary Authority (HKMA) will supervise bank-related digital asset activities. Public consultations are planned for both regulatory regimes. The blueprint also strengthens investor protection by mandating segregation of trading and custody services, capital requirements, and cybersecurity protocols. [para. 9][para. 10]

Tokenization receives dedicated attention, as the SFC and HKMA plan a legal review to facilitate the tokenization of real-world assets and financial instruments, including processes for issuing, settling, and registering tokenized securities. The policy organizes its priorities under the acronym "LEAP": legal infrastructure, expansion of tokenized offerings, application across sectors, and partnership and talent development. [para. 11][para. 12]

Further innovations include a pilot for tokenizing physical commodities—such as metals tracked in London Metal Exchange-approved Hong Kong warehouses—and the launch of the HKMA’s wholesale central bank digital currency (wCBDC) project, "Ensemble," which is currently in sandbox trials. [para. 13][para. 14]

The new framework provides a level playing field by granting tokenized ETFs the same stamp duty exemptions as traditional ETFs, supporting secondary market trading. Additionally, the government is developing tax exemption proposals for family offices and private funds investing in qualified digital assets, targeting implementation in the 2025/2026 fiscal year. [para. 15][para. 16]

Stablecoins remain central, both as vehicles for private sector innovation and potential government-led pilots. Authorities seek public input on how licensed stablecoins could serve the public sector. The policy also affirms the stable nature of these assets, which distinguishes them from more volatile cryptocurrencies. [para. 17][para. 18]

Talent cultivation is a significant priority, with expanded industry-academic partnerships to train global digital asset professionals and an increased focus on international regulatory collaboration. Lastly, the policy reflects the maturation of the sector by shifting its terminology from “virtual assets” to “digital assets.” [para. 19][para. 20]