In January 2026, during the Davos Forum, Hong Kong's Financial Secretary Paul Chan further defined Hong Kong's roadmap in the digital asset sector through a series of external statements: using "same activities, same risks, same regulations" as the baseline, integrating emerging assets into the existing financial order. Looking back at the institutional framework built in Hong Kong over the past few years, two sets of figures stand out—11 licensed virtual asset trading platforms and a $2.1 billion issuance of tokenized green bonds, which together form a regulatory puzzle from trading venues to asset forms and regulatory tools. The real test lies in how Hong Kong can find a middle ground between a policy stance that strives for "active development" and a risk preference that insists on "prudent regulation," without being seen as overly conservative, and seizing the opportunity to reshape the rules of digital assets and traditional finance within a limited window.
From Declaration to Licensing: The Formation of Regulation
Since 2023, Hong Kong has officially established a licensing framework for virtual asset service providers, clearly stating the principle of "same activities, same regulations" during this phase to address external questions about regulatory standards. The logic of the regulators is to view digital assets as an extension of financial activities rather than a completely different category: as long as the business involves securities-like trading, custody, or platform matching, it should meet requirements similar to those of traditional financial institutions in terms of capital adequacy, risk management, anti-money laundering, and investor protection. As the system takes shape, this principle gradually transitions from declaration to operational implementation.
In the latest external disclosure, Hong Kong confirmed that 11 virtual asset trading platforms have obtained licenses and are operating within a regulated framework. This number is neither a blanket release nor a symbolic selection of a few samples, but rather a balance sought between speed and quality through review, selection, and window guidance. The regulators' choices are reflected in two dimensions: first, prioritizing platforms that primarily serve retail and institutional clients for licensing, distinguishing between unregulated overseas platforms and local regulated platforms through licensing thresholds; second, retaining the right to review license renewals, business expansions, and product launches through dynamic regulation to control the potential for systemic risk spillover.
In market interpretation, this move by Hong Kong is seen as a key step in "integrating digital assets into the mainstream financial system." Under compliance pressure, traditional financial institutions are more inclined to participate in token trading or related products through licensed platforms rather than resorting to unregulated overseas platforms. Thus, a regulatory bridge is built: one end connects local brokers, family offices, and asset management institutions, while the other end connects token project parties, market makers, and emerging fintech companies, with the regulatory framework providing a clear and predictable operational track in between.
Opportunities and Boundaries of Stablecoin Licensing
During the statements made at Davos, Paul Chan explicitly mentioned that Hong Kong plans to issue stablecoin licenses, but has not yet announced a specific timeline or operational details. In multiple documents and interviews, officials have only emphasized the establishment of a licensing mechanism and regulatory framework while deliberately avoiding any precise dates or version numbers, indicating that the specific implementation timeline circulating in the market remains unverified. For institutions hoping to position themselves early, the only thing that can be confirmed is the direction, not the timing or specific terms.
Even so, the rationale behind the regulators' choice to prioritize stablecoins for regulation is not difficult to understand. On one hand, in payment and settlement scenarios, relevant currencies have played a key role in cross-border capital flows, transaction hedging, and on-chain financial applications, with their potential volume and turnover speed creating a certain substitute and complementary relationship with traditional payment systems. If Hong Kong is to further strengthen its functionality as an Asian financial hub, it must establish a controllable framework regarding the usage boundaries of such tools, the authenticity of capital sources, and the interaction with the local currency system. On the other hand, issues exposed in the international market over the past few years regarding stablecoin reserve transparency, asset mismatches, and liquidity crises have been viewed by major central banks and regulatory agencies as one of the sources of systemic risk. Building a licensing and regulatory system early helps to lock in participant qualifications and underlying asset quality standards before risks amplify.
From the perspective of potential license holders, the market generally expects competition among several types of institutions: first, payment institutions with existing payment licenses familiar with anti-money laundering and customer identification processes; second, banks and licensed brokers with a solid foundation in custody, settlement, and cross-border business; third, technology-driven fintech companies attempting to compensate for traditional finance's shortcomings in on-chain operations through technological capabilities. Compliance thresholds may revolve around capital requirements, the safety and liquidity of underlying reserve assets, periodic disclosure and auditing mechanisms, and information-sharing mechanisms with local and regional regulatory agencies. Compared to the emphasis on issuance and reserve transparency in Europe and the U.S., Hong Kong is more likely to strengthen the balance between cross-border capital flows and local financial stability; in contrast to the lenient experimental paths of some jurisdictions, Hong Kong aims to shape a "high standard, replicable" model in regional competition through the scarcity of licenses and strict entry standards, forming a competitive yet complementary relationship with the regulatory frameworks of Singapore and the West.
The Demonstrative Effect of $2.1 Billion Green Bonds on the Blockchain
On another front of the regulatory system, Hong Kong has endowed digital assets with more direct real financial functions through tokenized green bonds. According to official disclosures, Hong Kong has promoted the issuance of approximately $2.1 billion in tokenized green bonds, marking a symbolic case of combining green finance with distributed ledger technology under the leadership of sovereign and public sectors. The bonds themselves retain the basic structure of traditional green bonds, with funds raised specifically for projects that meet environmental benefit standards, but are presented in the form of on-chain tokens during issuance, registration, and settlement.
By adopting distributed ledger technology (DLT), the settlement and delivery chain of the bonds has been significantly compressed, allowing for changes in ownership, interest payments, and secondary circulation to be registered on-chain, reducing the time and costs associated with multiple intermediaries and repetitive reconciliations. For institutional investors familiar with traditional bond market operations, this retains the legal structure and risk-return characteristics they are accustomed to while providing higher transparency and efficiency on a technical level. As a result, the market generally believes that this issuance scale of up to $2.1 billion itself reflects institutional investors' recognition of compliant digital assets—they are willing to undertake sovereign and public sector credit through tokenized tools under strict contractual terms and regulatory frameworks, thereby opening a door for broader asset tokenization.
This demonstrative effect is not limited to Hong Kong. For other sovereign and quasi-sovereign issuers, tokenized bonds provide a new form for entering the global capital market: without changing the essence of the debt, they enhance responsiveness to technological frontiers and ESG issues through on-chain issuance. For corporate issuers, especially multinational companies and large financial institutions, Hong Kong's pilot offers a model that can be observed and replicated—how to utilize Hong Kong's legal framework and technological infrastructure to migrate part or all of the bond issuance process on-chain while meeting regulatory requirements in both the location of issuance and the fundraising location. As more sovereign and corporate entities tentatively follow suit, tokenized bonds may gradually evolve from a type of "innovative product" into a universal tool across markets, and Hong Kong's preemptive experiments in this process will directly relate to its voice and bargaining power in the global capital structure reshaping.
Controlled Trial and Error in the Regulatory Sandbox
To ensure continuous iteration of systems and products, Hong Kong relies not only on the formal licensing system but also on the regulatory sandbox mechanism that has been operational in the fintech sector for many years. Within this framework, financial institutions and technology companies can test innovative products and services in a controlled environment, while regulators confine potential risks within manageable boundaries through time-limited, scale-limited, and participant-limited approaches. For digital assets and tokenized application scenarios, the sandbox's significance lies in providing a testing ground for models that have not yet fully "ripened," allowing for a space free from immediate commercialization but close enough to the real market.
In areas such as tokenized bonds, on-chain settlement tools, and institutional digital asset custody, the sandbox can accommodate a series of experimental steps from verifying technical feasibility to refining compliance design and integrating with existing financial infrastructure. Startups in the sandbox gain the opportunity for direct dialogue with regulators, allowing them to align with regulatory expectations before their products are fully formed, thereby reducing the likelihood of encountering compliance "hard walls" in the future; traditional institutions, on the other hand, lower trial and error costs through the sandbox, exploring the boundary conditions of new business lines without significantly deploying capital and system resources. For regulators, the value of the sandbox lies in real-time observation of risks—identifying which technological paths may generate new issues in data security, consumer protection, or market manipulation, and which business models need to reserve flexible space in rule-making, thus delineating clearer red lines and gray areas between risk, efficiency, and innovation. It is in this controllable trial-and-error environment that Hong Kong has been able to complete rounds of preemptive learning before formal regulations are introduced.
Comparative Perspectives of Singapore and Wall Street
If we place Hong Kong's digital asset layout within the global competitive landscape, we find that different financial centers are following distinctly different paths. Singapore also emphasizes prudence in licensing but has introduced relevant application pilots earlier in payment and cross-border settlement scenarios; the European and American markets are leading in tokenization attempts dominated by large financial institutions, with European regulators advancing rapidly on the legal framework for asset tokenization, while Wall Street in the U.S. explores the migration of some traditional asset portfolios on-chain through pilot projects led by large investment banks and asset management companies. In contrast, Hong Kong attempts to advance simultaneously on three fronts: licensing trading platforms, announcing stablecoin regulation, and tokenized green bonds, to form a more cohesive ecological layout.
The narrative of "active development + prudent regulation" has become an important tool for consolidating Hong Kong's positioning as an international financial center in this context. On one hand, active development sends a clear signal to the world that digital assets are not excluded from the mainstream financial system but are integrated into a regulatory framework that is predictable and open to dialogue; on the other hand, prudent regulation addresses the long-term concerns of international capital regarding the rule of law environment and risk control, preventing Hong Kong from being simply categorized as a "regulatory lowland" or "speculative testing ground." The combination of these two aims to allow Hong Kong to maintain its innovative appeal in the global capital allocation landscape while avoiding exclusion by cautious funds due to regulatory disorder.
Over a longer period, the "rule dividends" released by clear regulation will directly impact institutional participation, project selection, and talent flow. For international financial institutions, a clear licensing path and compliance expectations are crucial considerations in deciding whether to establish regional headquarters in a particular market, expand business lines, or allocate local assets; for project parties and technical talent, the more transparent the rules and the more stable the execution, the more likely high-value-added businesses will remain local, rather than merely using the area as a "transit station" for fundraising or listing. When these behavioral choices overlap over time, whether Hong Kong can transform its early layout in the digital asset field into a lasting advantage in financial and human capital aggregation will become a key variable in its competition with financial centers like Singapore, New York, and London.
Betting on Certain Rules in an Uncertain World
Returning to the present, the three main lines that Hong Kong has laid out in the digital asset field—licensing trading platforms, tokenized green bonds, and the regulatory sandbox—have formed a mutually supportive structure: the licensing system builds a safe boundary for trading and basic services, tokenized bonds validate the technical and regulatory feasibility with real assets and capital scale, and the sandbox provides a testing ground for the next stage of products and models. This three-tiered linkage from rules to assets, and from assets to innovative tools, constitutes the basic framework of Hong Kong's bet on a new order of digital assets.
However, it is equally important to note that several key issues remain to be tested over time. The specific regulatory framework for stablecoins has yet to be established, and how the admission standards, reserve requirements, and information disclosure intensity for different types of issuers are designed may still influence the risk profile and business focus of the entire ecosystem. Whether the 11 licensed platforms can develop sustainable business models under strict regulation and whether they have the ability to attract sufficient liquidity and quality projects in international competition also requires answers from the market. Whether the regulatory sandbox can truly lower the trial-and-error threshold in practice, rather than evolving into another layer of formalized approval, is also crucial for the sustained release of innovative vitality.
Looking ahead to the next one to two years, as global attention to digital assets and sustainable finance continues to rise, the crossroad chosen by Hong Kong—reconstructing asset forms on-chain while serving green and sustainable development agendas—will directly impact its ability to secure a place in the next round of reshaping international financial discourse. If it can maintain a delicate balance between regulatory certainty and innovation space, allowing the licensing system, tokenization pilots, and regulatory sandbox to mutually reinforce each other in practice rather than hinder one another, Hong Kong may have the opportunity to transform the current policy window into a structural bargaining chip in the reconstruction of the new global financial order.
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