Hong Kong is rapidly advancing its ambitions to become a leading financial innovation hub, particularly in the realm of digital assets. The city's financial regulators are actively laying the groundwork for a comprehensive legislative framework, aiming to provide clarity and robust oversight to the burgeoning crypto sector.
Forging a Comprehensive Regulatory Framework
Christopher Hui, Hong Kong's Secretary for Financial Services and the Treasury, has confirmed that local financial regulators intend to introduce a draft framework for digital assets by 2026. This extensive undertaking involves multiple initiatives, including a planned draft ordinance by the Financial Services and the Treasury Bureau and the Securities and Futures Commission. This specific legislation will target regulations for providers offering crypto-asset advisory services. These efforts build upon a public consultation launched in December, signaling a collaborative approach to shaping future policy.
Stablecoin Oversight and International Tax Compliance
Further solidifying its regulatory stance, the Hong Kong Monetary Authority (HKMA) has begun processing license applications for stablecoin issuers, following the implementation of the Stablecoin Ordinance in August. This ordinance mandates licenses for any entity issuing a stablecoin in or linked to the Hong Kong dollar. Additionally, Hong Kong is aligning with international efforts to combat cross-border tax evasion, with plans to submit legislative proposals this year. These proposals will implement the OECD's crypto-asset reporting framework and common reporting standards, enabling automatic exchange of tax information related to crypto transactions with other jurisdictions starting in 2028. Currently, while these regulatory gears are turning, 11 crypto platforms are already authorized by the Securities and Futures Commission to serve Hong Kong residents, underscoring the dynamic environment as the city strives to balance innovation with strong regulatory safeguards.
