Hong Kong’s monetary sector is grappling with an unprecedented surge of curiosity in real-world asset (RWA) tokenization as mainland Chinese language establishments pour assets into creating blockchain-based merchandise within the metropolis.
The large strikes observe the rollout of its new stablecoin licensing framework. Business leaders and advisers at the moment are urgent the federal government to speed up regulatory measures to channel the passion into sustainable development.
Mainland establishments pile into tokenized belongings
Till just lately, most Chinese language-funded establishments in Hong Kong had restricted publicity to digital belongings, focusing as an alternative on conventional funding autos.
That modified this summer time after town’s Stablecoins Ordinance, which took impact on August 1, established a licensing regime underneath the Hong Kong Financial Authority (HKMA) requiring issuers to take care of high-quality reserves, assure convertibility, and adjust to anti-money laundering controls.
Since then, fund managers and insurers backed by mainland capital have been instructed by headquarters to trial tokenized merchandise. “That is assigned homework,” one Hong Kong-based fund supervisor mentioned, noting that establishments had been experimenting with RWAs resembling tokenized cash market funds and rental revenue streams.
Business executives argue that blockchain-based merchandise will finally make markets extra environment friendly. “Within the subsequent 5 to 10 years, all monetary merchandise will likely be on the blockchain,” one Hong Kong fund head instructed Tencent. However others warning towards extreme hype.
Zhou Chenggang, chief government of Taikang Asset Administration Hong Kong, warned the sector was experiencing a false hearth and wanted to chill off, including that not all belongings should be on-chain.
He mentioned, “I oppose mythmaking about any new know-how. Many individuals mistakenly consider that RWAs, which will likely be attainable years sooner or later, are possible at present. It is a false impression and might mislead the market.”
PwC requires extra market reforms
The regulatory momentum round tokenization can be prompting requires extra capital-market reforms. At a press convention tied to the federal government’s session for the 2025 Coverage Handle, PwC urged the authorities to take decisive steps to strengthen Hong Kong’s function as a “super-connector” between China and world markets.
Suggestions included increasing the scope of confidential itemizing functions to cowl dual-primary and high-growth corporations, giving issuers extra flexibility to maintain delicate knowledge personal till approvals are secured.
Concerning the Hong Kong authorities’s just lately launched “Hong Kong Digital Asset Growth Coverage Assertion 2.0,” PwC recommends accelerating the implementation of digital asset-related methods.
The consulting agency believes that Hong Kong has the potential to change into a digital-first asset and wealth administration hub. In accordance with PwC, the institution of a blockchain-native asset registration system will assist promote asset tokenization.
Additionally, it identified {that a} registration mechanism for the issuance and switch of digital belongings resembling land, mental property, and fairness investments must be established to streamline processes and shorten transaction occasions.
Hong Kong is balancing momentum and warning
Town’s policymakers have made no secret of their ambitions. In June, the federal government unveiled its LEAP Framework (Authorized streamlining, Increasing tokenized merchandise, Advancing use instances, Individuals) to institutionalize stablecoins, tokenized bonds, and RWAs within the monetary system. Town has already issued tokenized inexperienced bonds and is seen as a testing floor for offshore yuan-backed stablecoins.
However business insiders warn that liquidity constraints and regulatory uncertainties may stall progress. A senior crypto government instructed Tencent that if an asset may already safe financing via conventional channels, tokenization added little worth. In the meantime, for lower-quality belongings, blockchain wouldn’t remedy liquidity considerations.
Nonetheless, the mainland authorities stay cautious. Analysts be aware that whereas Hong Kong is advancing stablecoin and tokenization guidelines, Beijing stays cautious of capital flight dangers and can enable solely a handful of licences within the close to time period.
