Ding Xueping says developments will deliver more benefits to the global economy and financial markets

Emerging as a new growth engine and a key focus of competition, digital assets have garnered considerable interest globally. The Hong Kong Special Administrative Region government has been actively carrying out top-level design, driving the city to step up its efforts to establish itself as a premier global hub for digital assets.

Recently, the HKSAR government issued the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong, outlining a blueprint and setting a clear policy direction. The document introduces the “LEAP” framework, which is built around four key dimensions: legal and regulatory streamlining, expanding the suite of tokenized products, advancing use cases and cross-sectoral collaboration, and people and partnership development. From Policy Statements 1.0 to 2.0, digital assets have evolved from an emerging concept into a key driver of economic growth. This demonstrates the HKSAR government’s firm commitment to promoting digital-asset development and provides greater certainty for long-term investment. This move has become a focal point of market interest lately and has been widely welcomed by market participants, such as OSL and HashKey.

Strategic foresight in shaping future of digital assets

Driven by practical development needs, the Policy Statement 2.0 proactively responds to industry expectations. For example, it proposes launching the consultation on licensing regimes for digital-asset service providers, in order to meet investor needs in liquidity sourcing, block trading, and secure asset custody. It also proposes providing a stamp-duty waiver for the transfer of tokenized exchange-traded funds, which will reduce transaction costs and accelerate market growth. Meanwhile, the Policy Statement 2.0 embraces new developments and applications. For instance, the government will encourage the development of digital asset infrastructures to ensure they meet the needs of Hong Kong’s digital-asset ecosystem. The government will also launch a funding program for blockchain and digital assets, which will promote the transformation of innovation into development advantages.

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Moreover, the Policy Statement 2.0 effectively balances development and security. On the one hand, it seizes opportunities by enhancing liquidity in digital-asset trading and diversifying digital-asset product offerings, thereby energizing the market and fueling sectorwide growth. On the other hand, it takes a steady and risk-aware stance, prioritizing nontraditional security. It proposes the policy directions of establishing a comprehensive and unified regulatory framework for digital-asset service providers, thus maintaining market stability and enhancing investor safeguards.

Boost HK’s comprehensive competitiveness

The Policy Statement 2.0 is a new step for Hong Kong to consolidate its position as an international financial center as well as a global hub for high-caliber talent. The development of the digital-asset ecosystem offers a unique opportunity to integrate new technologies into traditional finance, such as financial asset tokenization, thereby reinforcing Hong Kong’s global financial leadership. The initiatives also include cultivating talent, providing profit tax concessions, and further supporting the growth of startups. These initiatives will facilitate the emergence of new digital-asset application paradigms in Hong Kong, positioning the city as a global hub for high-tech enterprises and top-tier talent.

The implementation of the Policy Statement 2.0 will also accelerate the upgrading and transformation of the real economy. The Policy Statement emphasizes that the digital-asset ecosystem will integrate with the real economy and deliver concrete benefits to it. Digital assets, such as stablecoin, have the potential to support the real economy by diversifying funding opportunities, reducing costs, creating efficiency gains, and facilitating investor participation. The initiatives proposed in the Policy Statement, including promoting the tokenization of a broader range of real assets and upgrading relevant infrastructure, will contribute to realizing these benefits.

Favorable environment for digital asset development

By leveraging its unique strengths with distinct regulatory flexibility, Hong Kong pioneers innovative digital-asset policies — showcasing the city’s dynamism and adaptability under the “one country, two systems” framework. Compared to the United States, whose relevant policy focuses on dollar-backed assets, Hong Kong adopts a more open approach in the recently passed Stablecoin Ordinance by allowing stablecoin to be pegged to different fiat currencies for issuance. With its openness, strong rule of law, and wide-ranging international connections, the Hong Kong SAR is well-positioned to take bolder steps in digital-asset development. This, in turn, is opening up broader pathways for China to engage in the global digital-asset landscape. As Hong Kong Financial Secretary Paul Chan Mo-po said, Hong Kong is harnessing its “testing ground” functions under the “one country, two systems” framework to contribute experience and insights to China’s financial development.

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The Policy Statement 2.0 is injecting new impetus and creating new competitive advantages for Hong Kong. Following the issuance of the Policy Statement 2.0, the government has rapidly taken steps to implement it. Christopher Hui Ching-yu, Hong Kong’s secretary for financial services and the Treasury, has provided elaborations across various occasions and the government launched a public consultation on establishing a licensing regime for digital-asset service providers. The Stablecoins Ordinance, taking effect on Aug 1, is also expected to facilitate Hong Kong’s advance toward becoming a global digital asset hub. As the vision for Hong Kong’s digital-asset development is realized, it will not only bring benefits to the economy and society, but also consolidate the city’s position as an international financial center. Furthermore, these developments will contribute to China’s high-quality economic development and deliver more benefits to the global economy and financial markets.

The author is a commentator on current affairs.

The views do not necessarily reflect those of China Daily.