Hong Kong Expands Access to Digital Assets with New Laws, Tax Breaks

Delivering the 2026-2027 Hong Kong Budget on 25 Feb, Financial Secretary Paul Chan announced initiatives to establish a platform for issuing digital bonds and provide tax breaks for funds and family offices investing in virtual assets. These steps are part of a broader strategy to develop a comprehensive regulatory framework for digital asset innovation. Julia Leung, CEO of the Securities & Futures Commission (SFC), has said that a proposal would permit brokers to offer margin financing to clients with strong credit profiles.

The government is taking a gradual approach to integrating these assets into an economy currently dominated by traditional financial services. A key component of this plan involves CMU Omniclear, a subsidiary of the Hong Kong Monetary Authority (HKMA), which will set up a digital asset platform this year. This infrastructure is designed to support the issuance and settlement of digital bonds, with plans to eventually extend support to other tokenized assets and regional platforms.

To remain competitive against jurisdictions such as Singapore, the government will make digital assets and precious metals eligible for tax concessions for investments made by funds and family offices. This revision is expected to take effect from the 2025/2026 tax year to attract more global capital to the city. These incentives follow a recent announcement by the SFC regarding the upcoming rollout of a framework for trading perpetual contracts.

While the budget address provided clarity on tax, details regarding stablecoin licences remain unchanged. The financial secretary confirmed that the first batch of licences is expected to be issued starting in March 2026. This follows the regulatory regime for fiat-pegged tokens that went into effect on 1 Aug 2025. Additionally, the HKMA is continuing its pilot of Project Ensemble, which explores real-value transactions using tokenized deposits.