Hong Kong's financial sector is tackling an immature surge that is not interested in real-world asset (RWA) tokenization as Chinese institutions in mainland China devote their resources to developing blockchain-based products within the city.
The big move follows the deployment of the new Stablecoin licensing framework. Industry leaders and advisors are now pushing governments to accelerate regulatory measures to direct their enthusiasm towards sustainable growth.
Mainland facilities are stacked on tokenized assets
Until recently, most Chinese-funded institutions in Hong Kong had limited exposure to digital assets and instead focused on traditional investment vehicles.
This changed this summer after the city's stubcoin ordinance, which came into effect on August 1, established a licensing system under the Hong Kong Monetary Authority (HKMA), which requires issuers to maintain high-quality reserves, ensure conversion and adhere to anti-money laundering controls.
Since then, fund managers and insurance companies backed by the mainland capital have been asked by their headquarters for trial tokenized products. “This has been assigned homework,” said a fund manager, a Hong Kong-based fund manager, who is experimenting with RWAs such as tokenized money market funds and rental income streams.
Industry executives argue that blockchain-based products ultimately make the market more efficient. “In the next five to ten years, all financial products will appear in blockchain,” a Hong Kong fundhead told Tencent. But others warn against excessive hype.
Zhou Chenggang, chief executive of Taikang Asset Management Hong Kong, warned that the sector has experienced a false fire and needs to be cooled, adding that not all assets need to be chained.
He said, “I am against the myth about new technology. Many people mistakenly believe that RWAS, which is possible for future years, is feasible today. This is a misunderstanding and can lead to misleading markets.”
PWC is hoping for more market reforms
Regulatory momentum regarding tokenization is also spurring calls for more capital market reform. At a press conference in relation to government consultations on the 2025 policy speech, the PWC urged authorities to take critical steps to strengthen Hong Kong's role as a “super-connector” between China and the global market.
Recommendations include expanding the scope of confidential list applications to cover dual primary and high-growth companies, providing publishers with more flexibility to keep sensitive data private until approval is ensured.
Regarding the recently released Hong Kong Government's “Hong Kong Digital Asset Development Policy Statement 2.0,” the PWC recommends accelerate the implementation of digital asset-related strategies.
The consulting company believes Hong Kong could become a digital-first asset and wealth management hub. According to PWC, the establishment of blockchain and native asset registration systems will help promote asset symbolism.
He also pointed out that it is necessary to establish a registration mechanism for the issuance and transfer of digital assets such as land, intellectual property and stock investments to streamline the process and reduce trading times.
Hong Kong balances momentum and attention
City policymakers keep their ambitions a secret. In June, the government announced the LEAP framework in the financial system: legal rationalization, expansion of tokenized products, expansion of use cases, use cases, people). The city has already issued tokenized green bonds, which are considered a test site for the ridiculous, ridiculous, ridiculous things that offshore support.
However, industry insiders warn that liquidity constraints and regulatory uncertainty can hinder progress. A senior Crypto executive told Tencent that tokenization had little value if the assets could already secure funding through traditional channels. On the other hand, for low-quality assets, blockchain does not resolve liquidity concerns.
Still, mainland authorities remain cautious. Analysts should note that while Hong Kong is moving forward with the Stablecoin and Tokenization rules, Beijing is cautious about the risk of capital flight and will only allow a handful of licenses in the short term.
