In an effort to become a global leader in the digital assets sector, Hong Kong has released its second major policy to regulate crypto in the city. The policy statement targets cryptocurrencies as well as promotes tokenization. The government outlined a detailed regulatory roadmap that focuses on risk management, investor protection, and fostering innovation.

The new framework will be overseen by the Securities and Futures Commission (SFC). It will regulate key players in the crypto industry, such as digital asset service providers, custodians, stablecoin issuers, and exchanges. According to the statement released, public consultations for licensing are expected to begin soon.

Hong Kong Strengthens Efforts to Regulate Crypto

The new wave of efforts is in line with Hong Kong’s commitment to strengthening the city’s position as a crypto hub. Their efforts began in 2022 when the city declared its willingness to engage with the global crypto industry. Following that, there were a series of developments, such as the issuance of licenses to four crypto exchanges in December 2024. A new law taking effect on August 1 will also enable the licensing of stablecoin issuers.

The Hong Kong government also aims to review and enhance the legal framework for the tokenization of real-world assets (RWAs) and financial instruments. The review will be led by the Hong Kong Monetary Authority and the Financial Services and the Treasury Bureau (FSTB). It will emphasize broadening the practical applications of tokenization.

Financial Secretary Paul Chan emphasized the government’s ambition to diversify use cases and support liquidity. Chan stated, “We aim to incentivize RWA tokenization and improve accessibility by clarifying tax implications, such as stamp duty, on tokenized exchange-traded funds (ETFs).”

The government will also move to formalize the issuance of tokenized government bonds and encourage the secondary market trading of tokenized ETFs on licensed platforms, a sign of growing institutional acceptance of blockchain-enabled finance.

Globally, tokenization of RWAs has surged 380% over the past three years, reaching a market size of $24 billion this month, according to a joint report by RedStone, Gauntlet, and RWA.xyz.

Hong Kong’s regulatory move aligns it with international peers, including the U.S., U.K., South Korea, and Pakistan, who are also ramping up crypto oversight. The European Union’s Markets in Crypto Assets (MiCA) law, which is one of the most complete sets of rules, went into force in 2024. Hong Kong wants to do more than just manage the changing global digital economy; it also wants to encourage new ideas.

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