Hong Kong Advances Digital Asset Agenda with LEAP Framework

By: Eva Baxter

Hong Kong is making substantial changes to its digital asset development agenda, as highlighted in the release of its latest policy statement, dubbed "Policy Statement 2.0." This new statement updates the previous framework from October 2022 and emphasizes Hong Kong's ambition to position itself as a global leader in the burgeoning field of financial technology and innovation.

At the heart of these advancements is the LEAP framework, which stands for Legal and regulatory streamlining, Expanding tokenized products, Advancing use cases, and promoting People and partnership development. This framework intends to ensure a well-rounded growth of Hong Kong's digital asset ecosystem. The government aims to merge the digital economy with the tangible aspects of societal life efficiently by focusing on these crucial areas.

Part of the government's push includes implementing a comprehensive regulatory regime for digital asset service providers, such as crypto exchanges and stablecoin issuers, set to take effect from August 1. By streamlining legal and regulatory pathways, Hong Kong seeks to not only encourage market innovation but also maintain a balance with risk management and investor protection. The Securities and Futures Commission (SFC) will take charge of licensing efforts, ensuring that market participants adhere to high standards of operation.

Moreover, the policy supports the tokenization of real-world assets—an initiative designed to encourage market liquidity and greater investor participation. The tokenization drive includes a focus on assets like government bonds and renewable energy instruments, armed with potential incentives such as favorable tax conditions for tokenized exchange-traded funds (ETFs). Furthermore, Hong Kong plans to bolster talent development through collaborations with academic institutions, aiming to sustain long-term growth and innovation in the digital asset space.