In the past three years, what profound changes have been triggered by Hong Kong’s transition from “virtual assets 1.0” to “digital assets 2.0”?

The "Hong Kong Digital Asset Development Policy Declaration 2.0" (hereinafter referred to as the "Policy Declaration 2.0") is a policy document issued by the Government of the Hong Kong Special Administrative Region of China on June 26, 2025. It aims to build Hong Kong into a global innovation center in the field of digital assets and further update and improve the existing policies and regulatory framework to adapt to the rapid development of the digital asset industry.

Financial Secretary Paul Chan said that the Policy Declaration 2.0 demonstrates the SAR government's vision for the development of digital assets, and demonstrates the substantive application of tokenization through practice to promote the diversification of application scenarios. By combining prudent regulation and encouraging market innovation, a more prosperous digital asset ecosystem that is integrated with the real economy and social life will be built, bringing benefits to the economy and society, while consolidating Hong Kong's leading position as an international financial center. With the release of the Policy Declaration 2.0, I believe everyone will raise the following questions:

• “2.0”? What is Policy Statement 1.0?

• What does Policy Statement 2.0 have to do with it...

• What does Policy Statement 2.0 mainly talk about?

• What is Hong Kong’s attitude towards the development of digital assets?

The Crypto Salad team will combine the development of virtual assets and digital assets to interpret the important information in the Policy Declaration 2.0 from multiple dimensions.

 The above picture is the "Hong Kong Digital Asset Development Policy Declaration 2.0"

1. Hong Kong releases digital asset declaration

First of all, before explaining the "Policy Declaration 2.0", the Crypto Salad team will help everyone review what the "Declaration 1.0" said?

The so-called "Declaration 1.0" is called "Policy Declaration on the Development of Virtual Assets in Hong Kong" (hereinafter referred to as "Policy Declaration 1.0"). "Policy Declaration 1.0" was issued in 2022. It clarifies the policy positions and guidelines set by the Hong Kong Special Administrative Region Government to develop a vibrant virtual asset industry and ecosystem in Hong Kong, including: the vision and policy of the Hong Kong government, the regulatory framework for virtual assets, the Hong Kong government's green bonds and digital Hong Kong dollar and other pilot programs, the Hong Kong government's outlook on the future of virtual assets, etc. "Policy Declaration 2.0" is a further upgrade on its basis, including: goal continuation, deepening of supervision, expansion of key points, expansion of scenarios, terminology changes, increased tax incentives, etc. The difference between the two is shown in the following table:

 The above table briefly describes the differences between Policy Statement 1.0 and Policy Statement 2.0.

In recent years, the concept of digital assets has become increasingly clear, and as all stocks related to digital concepts have skyrocketed, the public is no longer afraid of the concept of stablecoins and virtual assets. With the release of the Policy Declaration 2.0, it can be clearly felt that the concept of "digital assets" is about to replace the original concept of "virtual assets". Not only do more and more senior leaders, professional investment institutions, native Crypto and new players prefer to use the term "digital assets", but also, as shown in the table above, in the Policy Declaration 2.0, "virtual assets" are also transformed into the term "digital assets". This also means that the development of digital assets will enter a new era.

 The above picture shows the global RWA market size and transaction volume (Source: RWA.xyz)

The release of "Policy Declaration 2.0" was proposed on the basis of "Policy Declaration 1.0" released in October 2022. Compared with "Policy Declaration 1.0", the release of "Policy Declaration 2.0" not only changed the concept of "virtual assets" to the concept of "digital assets", but also upgraded stablecoins from "tool currency" to "infrastructure currency", and clearly implemented the stablecoin issuer supervision system from August 1, 2025, and set requirements for reserve asset management, etc., to make it more legal and more widely accepted.

In addition, the policy declaration regards the tokenization of real-world assets as a key industrial development direction. It not only promotes the normalization of bond tokenization, but also plans to include more income-generating assets in the scope of tokenization, which will break the boundary between the virtual economy and the real economy.

2. Four Core Pillars of the LEAP Framework

In traditional businesses, a considerable part of the business is regulated by corresponding laws, but in emerging businesses such as RWA and digital assets, there is a lack of relevant laws and regulations. The "Leap" framework proposed in the Policy Declaration 2.0 makes up for this. It includes four core pillars, namely: optimizing laws and regulations, expanding the types of tokenized products, promoting application scenarios and cross-sector cooperation, and developing talents and partners. The following will be introduced in detail.

1. Legal and regulatory streamlining

The Hong Kong government announced on its official website that the government is building a unified and comprehensive regulatory framework for digital asset service providers, covering digital asset trading platforms, stablecoin issuers, digital asset trading service providers and digital asset custody service providers. Among them, the Securities and Futures Commission (SFC) will serve as the main regulatory agency for the future licensing mechanism for digital asset trading service providers and digital asset custody service providers. At the same time, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority will lead a comprehensive legislative review to promote the tokenization of real-world assets and financial instruments.

The review will comprehensively examine all processes of tokenized bond issuance and trading, including but not limited to settlement, registration and record requirements. The core points mainly mention the respective responsibilities of the Securities and Futures Commission, the Treasury Bureau and the Hong Kong Monetary Authority, which lays the foundation for the governance of the digital asset industry.

 The above picture shows the announcement of the Policy Declaration 2.0 released by the Hong Kong government on its official website

2. Expanding the suite of tokenised products

In this regard, the Hong Kong government mentioned: “The Government will regularise the issuance of tokenised government bonds and provide incentives for the tokenisation of real-world assets (including by clarifying the stamp duty arrangements applicable to tokenised exchange-traded funds) to enhance liquidity and accessibility. On this basis, the Government welcomes secondary market trading of relevant tokenised exchange-traded funds through licensed digital asset trading platforms or other platforms in the future. The Government will also promote the tokenisation of a wider range of assets and financial instruments, demonstrating the diverse applications of the technology in different sectors, including precious metals (such as gold), non-ferrous metals and renewable energy (such as solar panels).”

"Regularizing the issuance of tokenized government bonds" means that all financial products at the bottom level will be put on the chain; and "real-world asset tokenization" includes not only RWA, but also the tokenization of other financial instruments. In addition, the "stamp duty exemption" and "welcome to see other platforms for secondary trading" emphasized in the Policy Declaration 2.0 can promote the liquidity and popularity of digital assets, and the problem that digital assets cannot be circulated in the secondary market, which was previously criticized by most people, can also be solved.

3. Advancing use cases and cross-sectoral collaboration

In promoting application scenarios and cross-sector cooperation, the Hong Kong government mentioned that the licensing mechanism for stablecoin issuers will be implemented on August 1, which will help promote the development of substantive application scenarios. At the same time, the government is also committed to strengthening cooperation among regulators, law enforcement agencies and technology providers to develop digital asset infrastructure. To express support and take the lead, the government welcomes market participants to make suggestions on how the government can experiment and use licensed stablecoins. In addition, Cyberport will also launch a blockchain and digital asset pilot funding program, which supports start-ups and related institutions, covering incubation, accelerators, marketing, artificial intelligence and other aspects, and provides funding for application projects with future application potential, iconic and market influence, thereby promoting the development of Hong Kong's digital technology, cultivating relevant talents and enterprises, attracting more talents, promoting industrial upgrading, and creating a good digital technology ecosystem.

The most important point about this framework is that it requires regulatory agencies and law enforcement agencies to cooperate with technology providers, that is, to require them to learn the technology in related fields as quickly as possible so that they can handle related cases fairly and impartially; market participants can also communicate with institutional participants and provide valuable suggestions on issues such as "how to get a license?" and "how to conduct testing?"

4. People and partnership development

Regarding the last point, the Hong Kong Special Administrative Region Government mentioned: The Government is committed to working with the industry and academia to promote talent development and position Hong Kong as a center of excellence for digital asset knowledge sharing and promoting international cooperation, including joint research programs and global regulatory collaboration. The Government will build a sustainable talent pool by cultivating a new generation of entrepreneurs, researchers and technical experts.

Currently, talents from the mainland and Singapore have been lost due to policy reasons, but Hong Kong has seized this opportunity and implemented a series of plans such as "high talents" and "excellent talents", making unremitting efforts to attract talents and become a talent base.

III. Key Points of Policy Declaration 2.0

1. Unified and comprehensive regulatory framework

Currently, in this section, we can find the following keywords: digital asset exchanges, stablecoin issuance, digital asset trading service providers, and digital asset custodians. These four entities are the key participants in the digital asset ecosystem.

Among them, digital asset exchanges, as the core platform for digital asset transactions, provide users with digital asset buying, selling, exchange and derivative trading services. They need to apply to the China Securities Regulatory Commission for "Category 1 (Securities Trading)" and "Category 7 (Providing Automated Trading Services)" licenses to ensure compliance operations.

The issuance of stablecoins mainly refers to the issuance of stablecoins anchored to physical assets, which aims to reduce the price risk of digital assets and is subject to the "Stablecoin Regulations" that will come into effect on August 1, 2025.

A digital asset trading service provider is a company that provides users with auxiliary services for digital asset trading and does not directly operate an exchange. It needs to comply with the Securities and Futures Ordinance.

 The above figure is excerpted from the "Unified and Comprehensive Regulatory Framework" in the Policy Statement 2.0

2. Review of Tokenization Law and Regulation

In addition, this section clearly states that Hong Kong needs to formulate tokenized laws and strengthen regulatory measures. To unleash the potential of financial technology and digital technology, legal and regulatory systems are essential. The key links that should be regulated and reviewed at present include but are not limited to: tokenized bond issuance, transaction process, settlement, registration and record requirements.

The Hong Kong Special Administrative Region People’s Government has previously issued two tokenized green bonds worth HK$6.8 billion, and has explicitly stated that it will regularize the issuance of government tokenized bonds, including bonds of different denominations, currencies and cycles, to cater to a wider range of investors. This move is in line with the document’s statement of “leveraging the potential of financial technology and digital technology.”

 The above picture is excerpted from the "Tokenization Legal and Regulatory Review" in the "Policy Statement 2.0"

3. Providing incentives for tokenization of real-world assets and financial assets

The third aspect is more important, which mainly talks about providing incentives for the tokenization of real-world assets and financial assets. The cooperation between the HKMA and the SFC has always been very close, and the regulatory sandbox has not been advanced quickly. It has been almost a year since the launch of the Longxin project. The slow progress is mainly due to the fact that the HKMA must be responsible for promoting the construction of the digital Hong Kong dollar. The Policy Declaration 2.0 also mentioned that it is necessary to promote the settlement of inter-bank tokenized deposits. In other words, it is necessary to encourage the construction of the digital Hong Kong dollar.

Currently, the London Metal Exchange (LME) has included Hong Kong as a licensed delivery location within the global warehouse network. For the commodity ecosystem, if tokenization and physical asset tracking technology are applied in the storage plan, then tokenization technology can become an identification tag for global warehouses, which is a very important technology in the fields of supply chain finance, commodity trading and international logistics settlement. In addition to gold and precious metals, other non-ferrous metals and renewable energy are also at the forefront of tokenization.

The Stablecoin Regulations, which will be implemented on August 1, 2025, focus on the management of reserve assets, stability mechanisms, redemption processes, and prudent risk management. This is consistent with the content mentioned in the Policy Declaration 2.0.

 The above picture is excerpted from "Providing Incentives for Tokenization of Real World Assets and Financial Assets" in the Policy Declaration 2.0

(IV) Hong Kong’s First Batch of Digital Asset Indexes

In addition, the Policy Declaration 2.0 document also mentioned the first batch of Hong Kong digital asset indexes that have been released by the Hong Kong Stock Exchange. This will increasingly become a reliable price benchmark for Bitcoin and Ethereum in Asia, and the ultimate goal is to consolidate Hong Kong's leading position as an international financial center.

(V) Consulting services provided by the Finance Bureau and the China Securities Regulatory Commission

The document also pointed out that, for now, the Finance Bureau and the China Securities Regulatory Commission are still providing certain consultations on digital asset trading service providers and digital asset custody service providers, which will also make the operation of digital assets smoother.

4. Interpretation of Encrypted Salad

The core goal of the Policy Declaration 1.0 is to solve the fundamental problem of the Hong Kong market from "nothing" to "something", so its content is mainly to build the most basic framework regulations. So far, with the gradual establishment and improvement of various law enforcement agencies, the market has formed a clear understanding of the implementation methods and specific forms of "something".

However, in the new stage of market development, being satisfied with "having a basic framework" alone can no longer meet the needs, and the pursuit of ecological prosperity has become the core direction. This requires balancing the interests of all parties and absorbing almost all participants, including not only traditional asset holders and investors, but also players, speculators and other speculative participants. To achieve this goal, it is necessary to open up more clear development outlets. The "Policy Declaration 2.0" has a clearer explanation of precious metals and other categories, which is a reflection of this idea.

In addition, the Policy Declaration 2.0 mentions related contents such as "issuing licenses", "regulatory frameworks", and "consulting services". It not only solicits public opinions, but also clearly states that it will be implemented in the future. By standardizing the key processes of the entire chain of digital assets from issuance, circulation to exit, ensuring their safety and reliability, and implementing license management, it can provide a stable operating environment for participants. This is a significant progress of the Policy Declaration 2.0. At the same time, government officials, legislators and other parties actively absorb and supplement public opinions. This feature is also reflected in the accuracy of the Policy Declaration 2.0 and more laws and regulations.

As mentioned above, according to the "LEAP" framework, compliance supervision must be promoted first, then product category expansion, cross-domain scenario extension, and finally the implementation of attracting talents. These constitute the cornerstone of ecological prosperity and provide the necessary conditions such as "talent", "funds" and "clear goals" for relevant entities to participate in the digital asset industry.

Crypto Salad believes that the Policy Declaration 2.0 accurately defines the management direction of this field. If it can be properly implemented, the Hong Kong digital asset ecosystem will be basically formed; if it is successfully implemented, the crypto financial market and funds will be highly integrated.

This article only represents the personal views of the author and does not constitute legal advice or legal opinion on specific matters.