Hong Kong takes LEAP in race for digital asset leadership

On 26 June 2025, the Hong Kong Government released a second Policy Statement on digital assets (DA) building on their initial statement of October 2022. The statement introduces the “LEAP” framework: Legal and regulatory streamlining, Expanding the suite of tokenised products, Advancing use cases and cross-sectoral collaboration and People and partnership development. According to the Secretary for Financial Services and the Treasury, Mr Christopher Hui, LEAP aims to create “a trusted, sustainable and deeply integrated DA ecosystem embedded within the real economy”.

Legal and regulatory streamlining

The Government intends to establish a unified regulatory framework covering DA exchanges, stablecoin issuers and DA dealing and custodian service providers. The Securities and Futures Commission (SFC) will be the lead authority for licensing and registration of DA dealing and custodian service providers, while the Hong Kong Monetary Authority (HKMA) will regulate banks and their DA-related activities.

The Financial Services and the Treasury Bureau (FSTB) and the HKMA will conduct a legal review to facilitate the tokenisation of real-world assets (RWAs) and financial instruments, covering areas such as settlement, registration and record-keeping. The statement also affirmed that Hong Kong would implement international standards including IOSCO's policy recommendations, the Financial Stability Board’s crypto-asset framework, the OECD’s Crypto-Asset Reporting Framework and the Basel Committee’s prudential treatment of crypto-asset exposures.

Expanding the suite of tokenised products

The Government plans to ‘regularise’ the issuance of tokenised Government bonds, building on its earlier green bond pilot issuances. This includes exploring different currencies, tenors and innovative features to provide a consistent supply of high-quality digital bonds.

Under the HKMA and SFC’s Project Ensemble, the Government aims to promote use cases including the tokenisation of money market funds and revenue streams from assets such as electric vehicle charging stations. It also plans to expand tokenisation efforts across sectors like precious metals, non-ferrous metals and renewable energy.

The Government has proposed extending profits tax concessions currently available to privately offered funds and family-owned investment holding vehicles to include specified DA transactions with changes expected to take effect from 2025/26 (subject to legislative approval).

Advancing use cases and cross-sectoral collaboration

A new licensing regime for stablecoin issuers will come into effect on 1 August 2025. The Government has invited proposals on how they can test usage of licensed stablecoins. Cyberport, Hong Kong’s digital technology incubator, will also launch a funding scheme to support blockchain and DA projects with a focus on high-impact applications that can serve as benchmarks for future use cases.

People and partnership development

The Government aims to position Hong Kong as a global centre of excellence for DA knowledge-sharing and international cooperation. It will work with industry and academics to build a talent pool of entrepreneurs, researchers and technologists as well as conducting joint research initiatives and training programs.

Speaking at the Wealth Management Expo on 21 June 2025, the Financial Secretary, Mr Paul Chan, cited ‘financial innovation’ as a key reason Hong Kong is positioned to become the world’s leading cross-border asset management centre within two to three years. He noted that ten virtual-asset trading-platform licences have already been granted and a further eight applications are under review, while the stablecoin framework coming into force on 1 August makes Hong Kong one of the first jurisdictions with statutory regulation of stablecoins.

The Policy Statement marks a step forward for Hong Kong in the race to lead digital asset innovation and shape the future of digital markets. Alongside the announcement, the FTSB and SEC has released a consultation on its proposed regulations for DA OTC transactions and custody. More broadly, these developments reflect a global consensus on the need for oversight and regulation for DAs as they become increasingly mainstream in the financial system.

The full policy statement can be accessed here.

Written by Steven Pettigrove and Emma Assaf