Hong Kong Sets Out Plan to Regulate Crypto, Motivate Tokenization

The Hong Kong government has unveiled its strategy to regulate cryptocurrency and promote tokenization, aiming to position the region as a global hub for digital assets. The regulatory framework, overseen by the Securities and Futures Commission, will cover custodians, digital asset services, stablecoins, exchanges, and service providers. Public consultations on licensing regimes will commence soon. Hong Kong has been actively enhancing its presence in the industry, with recent initiatives including granting licenses to four crypto exchanges in December and passing a law to license stablecoin providers starting August 1. The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority will review the legal framework for tokenizing real-world assets (RWAs) and financial instruments, focusing on tokenized bond issuances and transactions. Financial Secretary Paul Chan highlighted the government’s emphasis on diversifying the use cases for tokenization, especially in light of the 380% growth in RWA tokenization over the past three years, reaching $24 billion in value. The government plans to standardize the issuance of tokenized government bonds and promote the tokenization of RWAs to enhance liquidity and accessibility, including clarifying the stamp duty treatment for tokenized exchange-traded funds (ETFs) and enabling secondary market trading of these tokenized ETFs on authorized platforms.