Hong Kong releases ‘LEAP’ framework for digital assets
The Financial Services and the Treasury Bureau (FSTB), a policy bureau attached to the government of the special administrative region of Hong Kong, has released a new digital assets policy statement, incorporating its “LEAP” framework for the digital assets industry within the city.
The document, outlining the government’s objectives and guiding principles relative to the digital assets sector, builds on its first policy statement for the industry which it published in October 2022.
A ‘LEAP’ towards an integrated digital assets ecosystem
The FSTB suggests that this new policy statement builds upon foundational initiatives pioneered through the initial policy statement, asserting that “Hong Kong is poised to 'LEAP' towards a trusted, sustainable, and deeply integrated [Digital Assets] ecosystem embedded within the real economy.”
The government agency also suggested that this “Policy Statement 2.0” also builds on the “ASPIRe” digital asset regulatory roadmap introduced by the Securities and Futures Commission (SFC) in February, outlining the next phase of digital asset sector development in Hong Kong.
Strengthening global hub status
The government has set out to home in on strategic measures to bring about greater liquidity in digital asset markets and diversify digital asset product offerings, while strengthening the Chinese autonomous territory’s position as a global hub for the digital asset sector.
“LEAP” is an acronym for the proposed initiatives that underpin the new framework, including:
- Legal and regulatory streamlining
- Expanding the suite of tokenized products
- Advancing use cases and cross-sectoral collaboration
- People and partnership development
The framework focuses heavily on the tokenization of real-world assets (RWA), with particular emphasis on bond tokenization. In February 2023, Hong Kong pioneered the issuance of the world’s first-ever tokenized government green bond. Building on that, it now seeks to bring about the regularization of the issuance of tokenized government bonds.
The Hong Kong government would also like to see tokenization efforts expanding into “a broader range of assets and financial instruments.” It cited sectors such as precious metals, non-ferrous metals and renewable energy as candidates for tokenization.
Promoting tokenized ETFs
The authorities are also encouraging tokenized exchange-traded funds (ETFs), with plans to introduce a stamp duty waiver for these products as an incentive. Additionally, the Hong Kong government is interested in nurturing the development of secondary market trading of such tokenized ETF products, whether that’s through digital asset trading platforms or other channels.
The framework considers the further development of stablecoins. The city’s new licensing regimen for stablecoin issuers commences on Aug. 1. The FSTB maintains that stablecoins have the potential “to transform payments, supply chain management, and capital market activities by offering a cost-effective and efficient alternative to traditional systems.”
In order to capitalize on this potential, the Hong Kong government, together with the city’s regulators, intends to enable licensed stablecoin issuers in the city “to explore and implement different stablecoin use cases.”
Cyberport, a Hong Kong business park and digital technology incubator that hosts in excess of 1,650 startups, will also extend its support through its incubation ecosystem to further the objectives set out in the Hong Kong government’s new digital assets policy statement.
