On June 26, 2025, the Hong Kong government released the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong (hereinafter referred to as “Statement 2.0”), marking a strategic upgrade in Hong Kong’s digital asset roadmap. The new statement continues to emphasize core principles such as support for innovation and balanced regulation, while focusing on enhancing the liquidity of digital asset trading and promoting a more diversified supply of digital asset products. These efforts aim to strengthen Hong Kong’s position as a global digital asset hub.
Statement 2.0 is structured around the acronym “LEAP,” which stands for Legal and regulatory streamlining, Expanding the suite of tokenized products, Advancing use cases and cross-sectoral collaboration, and People and partnership development. The goal is to build an innovative, vibrant, sustainable digital asset ecosystem that is deeply integrated into the real economy, further enhancing Hong Kong’s leading role in the global financial landscape.
On October 31, 2022, the Government of the Hong Kong Special Administrative Region released the Policy Statement on Development of Virtual Assets in Hong Kong, making clear that the government and regulatory bodies would develop a regulatory framework for virtual assets based on the principle of “same business, same risks, same rules.” The statement announced the intention to introduce a licensing regime for virtual asset service providers and a regulatory framework for stablecoins used in payments. It also expressed openness to further discussions on the property rights of tokenised assets and the legality of smart contracts. Additionally, the government planned to launch pilot programs to issue tokenised green bonds for subscription by institutional investors.
Previously, Hong Kong had not established an independent regulatory framework specifically for digital assets. Since 2017, the Securities and Futures Commission (SFC) has regulated “security tokens,” requiring licenses for trading platforms and managers or funds investing in “virtual assets,” in accordance with the existing Securities and Futures Ordinance (SFO). For over-the-counter (OTC) transactions, a Money Service Operator (MSO) license issued by the Hong Kong Customs and Excise Department is required. On May 21, 2025, the Stablecoin Ordinance was officially passed, establishing a regulatory framework for stablecoins for the first time.
The taxation of digital assets is mainly governed by the Inland Revenue Department’s Departmental Interpretation and Practice Notes No. 39 (DIPN 39), updated in 2020, which introduced rules on how digital assets should be taxed. DIPN 39 classifies digital tokens into three types: payment tokens, security tokens, and utility tokens. According to DIPN 39 and general tax rules in Hong Kong, whether profits tax applies depends on the nature and use of the digital token. Tax treatment of proceeds from initial coin offerings (ICOs) generally follows the attributes of the tokens issued—meaning that the nature of the rights and obligations represented by the token, rather than the form of issuance, determines its taxability.
Furthermore, profits from the sale of capital assets are not subject to profits tax. If digital assets are acquired for long-term investment, profits from their disposal are also not taxed. However, profits generated from cryptocurrency business activities (including trading, exchanging, and mining) and arising in Hong Kong are subject to profits tax. Employment income received in the form of cryptocurrencies is subject to salaries tax.
Building on the first policy statement, the Hong Kong government has now released Statement 2.0, highlighting its commitment to striking a refined balance between risk prevention and innovation, and enhancing its position in the digital asset space. The LEAP framework is the core of Statement 2.0.
2.3.1 Legal and Regulatory Streamlining
The Hong Kong government is building a unified and comprehensive regulatory framework covering digital asset trading platforms, stablecoin issuers, digital asset trading service providers, and digital asset custodians. The core goal is to protect investors and consumers. Rather than setting up a separate digital asset regulatory body, the government aims to integrate digital assets into the existing regulatory system, clarifying responsibilities and jurisdictions to avoid regulatory overlap.
The government recommends designating the SFC as the primary regulator for digital asset trading service providers, responsible for licensing and registration, standard setting, optimizing regulatory processes, and reducing the risk of regulatory arbitrage across different digital asset frameworks. The Hong Kong Monetary Authority (HKMA) will serve as the frontline supervisor for banks in their digital asset trading activities.
Likewise, the SFC will be the primary regulator for digital asset custodians, responsible for licensing, registration, and standard-setting, while the HKMA will oversee banks engaged in digital asset custody activities.
In addition, the Financial Services and the Treasury Bureau (FSTB)—the agency responsible for releasing this policy statement and in charge of financial affairs and treasury functions in Hong Kong, including the formulation of financial market development policies and legislative proposals, as well as managing government assets, expenditures, and revenues—will work with the HKMA to lead the legal and regulatory framework for tokenisation. They will draw on international experience and current practices to promote the wider application of tokenisation in Hong Kong.
2.3.2 Expanding the Suite of Tokenised Products
The Hong Kong government will make tokenised government bond issuance a regular practice and explore various currencies and maturity structures. To better leverage the advantages of tokenisation, the FSTB and the HKMA will continue consulting industry experts to gather feedback from different sectors, including views on incorporating digital currencies to improve transaction efficiency, developing secondary market trading scenarios, and expanding investor participation in the local bond market.
Furthermore, the government will provide incentives for tokenising real-world assets and financial assets to enhance market efficiency, accessibility, and liquidity. Through the HKMA's Project Ensemble—which aims to explore blockchain-based financial market infrastructure using wholesale central bank digital currency (wCBDC) to facilitate interbank settlement using tokenised money—innovative use cases are being encouraged. These include the tokenisation of traditional financial products (such as money market and other funds) and revenue streams from real-world assets. The project will also explore building Ensemble infrastructure to support settlement of tokenised deposits between banks, simplifying processes and increasing liquidity.
To further develop the commodity trading ecosystem, the government supports the use of tokenisation and physical asset tracking technology in warehousing schemes. Tokenisation efforts will also extend to various industries, including precious metals (such as gold), base metals, and renewable energy (such as solar panels).
In February 2025, the SFC released the “ASPIRe” roadmap, built around five pillars: Access, Safeguards, Products, Infrastructure, and Relationships. It outlines 12 key initiatives aimed at developing a safer, more innovative, and more open digital asset market. A central goal of the roadmap is to expand the range of products and services offered on digital asset trading platforms. Initiatives include allowing professional investors to participate in staking and derivatives trading, and considering margin lending to improve market liquidity.
2.3.3 Tax Policy Enhancements
Statement 2.0 also introduces favorable signals on tax policy. It states that all ETFs listed on the Hong Kong Stock Exchange—including tokenised ETFs—will be exempt from stamp duty upon transfer (standard stamp duty for buying or selling Hong Kong securities is 0.1%).
In addition, the government will propose legislation to include specified digital assets in private funds and family office investment structures eligible for profits tax exemption (the standard tax rate is up to 16.5%). If passed by the Legislative Council, the tax exemption will take effect starting from the 2025/26 assessment year.
These tax reforms reflect Hong Kong’s strategic intention to build a digital asset-friendly tax regime. Together with legal and regulatory reforms, they form part of Hong Kong’s institutional advantage in the development of digital assets. By lowering structural costs, these measures are expected to attract more global capital and further enhance Hong Kong’s influence in the digital finance sector.
2.3.4 Advancing Use Cases and Cross-Sectoral Collaboration
The Hong Kong government has expressed support for stablecoin and other tokenisation projects, including exploring the use of stablecoins as payment tools. The Stablecoin Ordinance has already been officially released and will come into force on August 1, 2025, introducing a regulatory regime for stablecoin issuers. The ordinance sets requirements for reserve asset management, stabilization mechanisms, redemption processes, and risk management, ensuring the stability and credibility of issued stablecoins and boosting their reliability for local and international use.
The standardization of stablecoins provides essential infrastructure for the tokenisation of financial assets and applications of smart contracts. It also serves as a reference for issuing and managing other real-world assets (RWA), expanding the potential for stablecoin applications in the real economy. The licensing regime includes transitional arrangements to allow the industry to align with the requirements and make necessary business adjustments.
2.3.5 People and Partnership Development
The Hong Kong government will work with market participants and universities to promote talent development, aiming to build a sustainable talent pool to support Hong Kong’s goals in digital asset development. It also aims to position Hong Kong as a leading knowledge-sharing hub and strengthen cooperation with other jurisdictions.
Regulatory authorities will jointly support and participate in international collaboration, including through relevant international organizations and by signing memoranda of understanding with regulators and government agencies in other jurisdictions to facilitate information sharing and regulatory cooperation in the digital asset sector.
Although Statement 2.0 does not have binding legal effect, it clearly reflects the Hong Kong government's continued and strengthened crypto-friendly stance. Overall, by establishing a unified regulatory framework, reviewing legal and regulatory practices, institutionalizing tokenised government bond issuances, expanding tokenisation of real-world assets and financial products, promoting stablecoin use cases, enhancing supervisory coordination, and strengthening international cooperation, the Hong Kong government is laying a foundation for future innovation and market development.
Combined with a vibrant ecosystem supported by training programs, university-industry collaboration, and digital asset infrastructure, these efforts may bring substantial benefits to both the real economy and the financial markets.
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