Hong Kong's digital asset development is entering a new era of opportunities.
Following Guotai Junan International (01788.HK) becoming the first Hong Kong-based Chinese securities firm to offer comprehensive virtual asset trading services, its stock price surged from HKD 1.24 to HKD 7.02 within two trading days (June 25–26), eventually settling at HKD 3.54. Similarly, news about the Hong Kong Monetary Authority (HKMA) accepting license applications under the newly enacted Stablecoin Ordinance (effective August 1) has spurred activity among stablecoin-related stocks.
These developments underscore Hong Kong’s strategic push to reinforce its status as an international financial hub. On June 26, the Hong Kong SAR Government released the Policy Declaration 2.0 on Hong Kong Digital Asset Development (hereafter Declaration 2.0), outlining its vision to establish the city as a global digital asset center.
Key Advancements in Declaration 2.0
Dr. Feng Xiao, CEO of HashKey Group, noted that the Declaration 2.0 introduces a "LEAP" framework, focusing on four pillars:
- Legal & Regulatory Enhancements
- Diversified Tokenized Products
- Cross-Industry Application Scenarios
- Talent & Partnership Development
"Hong Kong is transitioning from a ‘testing ground’ for digital assets to a structured, scalable, and globally integrated ecosystem," said Dr. Xiao.
Major Regulatory Shifts:
- Stablecoin Supervision: Inclusion under HKMA oversight.
- RWA (Real-World Asset) Tokenization: Prioritized as a key sector.
- Tax Exemptions: For tokenized ETFs and digital asset funds.
👉 Explore Hong Kong’s digital asset regulatory landscape
Virtual Asset Trading: A Boost for Brokerages
Industry insiders reveal that multiple Hong Kong-based brokerages (e.g., Victory Securities, Eddid Securities) have upgraded to Type 1 Licenses (virtual asset trading/distribution). While Guotai Junan International leads among Chinese firms, others are expected to follow.
Business Model:
- Omnibus Accounts: Clients trade BTC, ETH, and other compliant assets via licensed exchanges.
- Strict Compliance: KYC/AML protocols; mainland Chinese investors barred.
Revenue Drivers:
- Commission Fees: High-frequency trading in volatile markets.
- Custodial Services: Cold wallets and asset security.
- Future Products: Crypto ETNs, structured notes.
SFC Data: 41 institutions currently offer virtual asset services under a "same business, same risks, same rules" framework.
Challenges: Liquidity vs. Compliance
While licensed exchanges ensure safety and compliance, limitations include:
- Fewer tradable assets vs. global platforms like Binance.
- Lower liquidity due to stringent listing standards.
"Profitability remains tough for local exchanges—regulatory rigor limits high-margin ICO listings," noted a crypto exchange executive.
Stablecoins & Future Synergies
With the Stablecoin Ordinance effective August 1, firms like Ant Group, JD CoinChain, and Standard Chartered are eyeing opportunities.
Key Insight:
- Distribution Channels: Type 1 licensees will be critical for stablecoin adoption.
- RWA Trading: Tokenized assets (e.g., green energy, logistics) expand use cases.
US Precedent:
- Circle’s IPO: Market cap soared to $53B, highlighting stablecoins’ role as "monetary layer for the internet."
Declaration 2.0: Bridging Web3 and Traditional Finance
The policy accelerates "digital twin assets"—real-world assets mirrored on-chain (e.g., green energy credits, gold).
Dr. Xiao’s Perspective:
"The fusion of Web3 and legacy systems via RWAs creates a new asset class. Compliance is the gateway."
Tax Incentives:
- Stamp Duty Waivers: For secondary trading of tokenized ETFs (boosting liquidity).
FAQ
Q1: What’s the LEAP Framework?
A1: A four-pillar strategy to optimize Hong Kong’s digital asset ecosystem via regulation, product diversity, collaborations, and talent.
Q2: Can mainland investors participate?
A2: No—licensed services exclude mainland residents.
Q3: How do stablecoins fit in?
A3: They’ll leverage Type 1 licensees for distribution and RWA trading.
Q4: What’s a "digital twin asset"?
A4: Real-world assets (e.g., bonds,仓单) tokenized for blockchain trading.
👉 Learn more about Hong Kong’s Web3 initiatives