HONG KONG: Hong Kong sharpens crypto hub focus amid rising global competition with new blueprint

Hong Kong is intensifying its bid to become a global digital asset (DA) hub with the release of an updated policy statement focused on accelerating stablecoin use and tokenisation efforts, amid renewed momentum in the US this year.
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“The government’s highly anticipated Policy Statement 2.0, aimed at establishing Hong Kong as a global digital assets hub, comes at a time when Trump 2.0 is trying to make America the ‘crypto capital of the planet’,” said Andrew Fei, a partner at King & Wood Mallesons in Hong Kong.

The city on Thursday released its “Policy Statement 2.0 on the Development of Digital Assets in Hong Kong”, an update to the first blueprint issued in late 2022, which first clarified the government’s intent to court cryptocurrency business.

Hong Kong is committed to bringing itself “to new heights of global digital asset leadership” in response to the “evolving global DA landscape”, the Financial Services and the Treasury Bureau (FSTB) said in the policy statement.

The document comes as the US has rapidly become a more favourable environment for crypto companies this year, under the friendlier policies of the second administration of President Donald Trump. Cryptocurrency values have surged since his election in November, which has also energised business activity in the sector.
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Last week, the US Senate passed a bill regulating the use of stablecoins, called the Genius Act, after Hong Kong passed its own law on the assets in May. The Hong Kong ordinance will take effect on August 1.

It shows that the “global race for digital assets innovation is well under way”, Fei said.

The policy statement introduced what the FSTB called the “Leap” framework, aiming to streamline the city’s legal and regulatory framework for digital assets, expand digital asset product offerings, advance use cases and foster industry talent.

These measures signify that Hong Kong is now “not merely a testing ground for digital assets”, but is transitioning towards increasing institutionalisation, scaling and globalisation, according to Xiao Feng, chairman and CEO of HashKey Group, a licensed crypto exchange operator.

The city’s latest policy statement placed a heavy focus on the tokenisation of real-world assets (RWAs), the process of putting representations of traditional assets on a blockchain. The city “strives to build a more flourishing DA ecosystem” that will “bring benefits to both the economy and society”, Financial Secretary Paul Chan Mo-po said in a statement on Tuesday.

One of the biggest proposals in the new document is for legislators to make tax concessions on profits from digital assets, bringing them into parity with traditional assets such as stocks and bonds.

“RWA tokenisation takes centre stage in the second digital assets policy statement, which makes sense since many predict that tokenisation will grow into a multi-trillion dollar market before the decade’s end,” Fei said.

Meanwhile, the city is charging ahead with stablecoin development, which industry players are exploring as a cross-border payment tool.

Hong Kong’s new digital asset blueprint will “strengthen market integrity, enable diverse activities and high-value transactions”, said Tian Gan, CEO of China Asset Management Hong Kong. With the new regulation, which requires licences for issuers, stablecoins will help the city’s Web3 ecosystem “reach a critical breakthrough moment”, Gan said.