On February 25, Hong Kong's Financial Secretary, Paul Chan, presented the 2026/27 Budget. Against a backdrop of heightened global geopolitical conflicts, continued gold purchases by central banks, and the accelerated development of digital asset regulatory frameworks, this year's budget outlines specific measures focused on two key financial areas: gold market development and digital currency regulation.
As the world's third-largest gold trading hub, Hong Kong boasts over a century of trading history and a complete industrial chain spanning mining, jewelry, and finance. A key infrastructure breakthrough is expected in 2026 with the trial operation of a Gold Central Clearing System, which will be launched alongside a cooperation agreement signed with the Shanghai Gold Exchange. To support this, the budget proposes three complementary measures: tax incentives, assistance in establishing an industry association, and the creation of a talent training framework. These initiatives aim to further upgrade Hong Kong into an international gold trading center and enhance its influence over global gold pricing.
In the digital currency sector, the budget confirms that a legislative bill will be submitted within the year to establish a licensing regime for digital asset trading and custody service providers. Concurrently, a licensing system for fiat-referenced stablecoin issuers has been implemented, with the first batch of licenses expected to be issued next month. Industry experts analyze that this signifies the basic formation of a comprehensive regulatory framework for digital assets.
Furthermore, the budget proposes promoting the electronification of debenture registers and aligning with the OECD's Crypto-Asset Reporting Framework to foster the deep integration of digital currencies with traditional finance at an infrastructure level.
Experts point out that these measures are precisely embedded within Hong Kong's existing financial ecosystem, consolidating traditional strengths while laying the groundwork for future competitiveness. They highlight Hong Kong's unique role under the "one country, two systems" principle in serving the national strategy of building a financial powerhouse. **Actively Promoting Hong Kong as an International Gold Trading Center** The Budget identifies building an international gold trading center as a key direction for consolidating Hong Kong's status as a financial hub. The Financial Secretary proposed a series of specific measures, including studying tax incentives for gold trading and settlement institutions, assisting in establishing an industry association, and setting up a training framework.
Key infrastructure breakthroughs are anticipated for Hong Kong's gold market in 2026. Firstly, the Hong Kong Gold Central Clearing System, managed by a wholly government-owned company after two years of preparation, is scheduled to begin trial operations within the year. This system establishes a core architecture of "government leadership, market participation, and cross-border collaboration," integrating clearing, storage, and trading. Meanwhile, cooperation with mainland gold markets is accelerating. In January, Hong Kong signed a cooperation agreement with the Shanghai Gold Exchange. Additionally, through a memorandum of understanding, Hong Kong is strengthening regional coordination with Shenzhen to build a collaborative gold refining base and jointly promote gold trade internationally.
Regarding storage capacity and commodity trading, Hong Kong has set a goal to expand gold storage in the city to exceed 2,000 tonnes within three years, aiming to become a regional gold storage hub. Currently, 15 London Metal Exchange-approved warehouses operate in Hong Kong.
Against this background, the Budget introduces three supporting measures on top of the infrastructure breakthroughs and regional coordination. An expert noted that the agreement with the Shanghai Gold Exchange and the launch of the clearing system mark a new stage of deep coordination between the Shanghai and Hong Kong gold markets. The three new measures address current development needs: enhancing the attractiveness for institutions to remain in Hong Kong through potential tax incentives; consolidating the historically fragmented market by assisting in forming an industry association; and addressing a talent shortfall by establishing a training framework to support the market's evolution from a spot trading center to a regional pricing hub. **First Batch of Fiat Stablecoin Licenses Expected Next Month** In the digital asset space, the Budget demonstrates a prudent, inclusive, and orderly regulatory approach, outlining a path from point-in-time supervision to comprehensive governance. The budget confirms the submission of a bill to license digital asset trading and custody providers, while the licensing regime for fiat-referenced stablecoin issuers is already operational, with the first licenses anticipated next month. Regulatory authorities will continue to promote exploration of more application scenarios by licensed issuers under compliant and risk-controlled conditions.
An analyst stated that this标志着 the basic formation of a full-chain regulatory framework for digital assets. The system, centered on licensed operations, risk control, and investor protection, covers key links like issuance, trading, and custody, aligning with international standards. This provides market participants with stable expectations, conducive to attracting compliant institutions and capital. Another expert concurred, stating the budget's language indicates Hong Kong is advancing digital asset regulation from "point-based supervision" to "full-chain governance." He emphasized that the global market's significant regulatory gap has not been about the existence of trading, but about who can legally provide services and how risks are managed. By focusing on licensing stablecoin issuers (the "entry point") and trading/custody infrastructure (the "vault"), the Hong Kong government is regulating the most critical and systemically risky segments.
The expert highlighted the critical nature of stablecoins, which are evolving into a "programmable payment and settlement layer." Once integrated into real-world scenarios, regulatory focus shifts to reserve authenticity, redemption reliability, anti-money laundering compliance, and control over cross-border activities. He noted that the Hong Kong Monetary Authority has indicated the first batch of licenses will be very limited, with scrutiny on use cases, risk management, and reserves. The Financial Secretary's emphasis on "innovation with prudence" and prioritizing "serving the real economy" signals a mature regulatory stance focused on sustainable development rather than mere activity.
From an international perspective, this approach is consistent with regulatory developments in the EU, Singapore, the UK, and the US, bringing key intermediaries into a licensed framework. However, Hong Kong possesses unique advantages: the market depth and legal predictability of an international financial center, and its role under "one country, two systems" as a testing ground, providing a safety valve for mainland China's broader financial risk prevention stance.
Regarding financial infrastructure, the Budget proposes providing guidance to clarify that registers of debenture holders can be maintained using distributed ledger technology, alongside exploring electronic signing of issuance documents and promoting the electronification of bearer bonds.
An expert views this as a key institutional breakthrough for integrating digital currencies with traditional finance. It addresses a core obstacle by providing legal clarity for ownership records on distributed ledgers, effectively creating a "language converter" between traditional infrastructure and digital asset protocols. The government's own issuance of tokenized bonds and the HKMA's Ensemble project provide trusted practical models and validate technical feasibility. This move is expected to boost secondary market liquidity by leveraging the 24/7 settlement capability and transparency of distributed ledgers, potentially giving Hong Kong a leading edge in the global digital finance competition.
Another expert sees greater potential value in the "Mainland-Hong Kong linkage" aspect. While the mainland strongly promotes digital yuan and blockchain applications, it has stricter constraints on cross-border capital flows and financial stability. If Hong Kong can establish tokenized bond infrastructure that is "rule-clear, settlement-controllable, and compliance-transparent," it could serve as a hub for offshore RMB products, cross-border trade finance, and institutional-grade real-world asset (RWA) tokenization, compatible with international rules yet connectable to mainland policy boundaries. Essentially, Hong Kong is not merely moving traditional finance onto the chain but adapting chain technology into a "new pipeline" that traditional finance can confidently use.
The Budget also proposes advancing the OECD's Crypto-Asset Reporting Framework and the revised Common Reporting Standard (CRS). An expert pointed out that such institutional building, while seemingly unrelated to bond tokenization, is the other side of the same coin regarding "financial infrastructure modernization." Only by aligning with international standards in anti-money laundering, tax transparency, and cross-border information exchange can digital financial assets be more readily adopted into mainstream allocations by global institutional capital, moving beyond niche circles.
Overall, Hong Kong's simultaneous advancement on both licensing and infrastructure fronts represents an attempt to transform the relationship between digital currency and traditional finance from parallel operation to embedded integration. It aims to contain risks through licensing and prudent regulation while enhancing efficiency through modernized registries and settlement systems.
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