Hong Kong will prioritize tokenization and stablecoins to drive its Web3 ecosystem, Financial Services and Treasury Secretary Christopher Hui said.
Tokenization as a Defining Trend
The South China Morning Post says Hui views tokenization as a “defining trend” that can reshape Hong Kong’s traditional financial markets. The country has been moving towards becoming a global crypto center by issuing licenses to virtual asset trading platforms and permitting tokenized investment products.
Tokenization allows investors to hold off-chain assets in the form of on-chain tokens. Earlier this month, the Hong Kong unit of China Asset Management obtained approval from the Securities and Futures Commission (SFC) to launch a tokenized money market fund. The fund is expected to go live by the end of February, which will open up retail investors to tokenized financial products.
Regulatory Developments and Initiatives
In August 2024, the Hong Kong Monetary Authority (HKMA) introduced “Project Ensemble Sandbox,” which was aimed at exploring the use of tokenized money in interbank settlement. The project is designed to promote tokenized transactions and accelerate the use of digital finance.
In March 2024, the Hong Kong Shanghai Banking Corporation (HSBC) introduced its first tokenized gold product, the HSBC Gold Token, to offer retail investors exposure to digital gold assets.
Stablecoins as a Primary Focus
Along with tokenization, Hong Kong is also speeding up plans for stablecoin regulation. Christopher Hui reaffirmed the government’s interest in stablecoin development, which aligns with global trends such as U.S. regulatory efforts.
Hui introduced a stablecoin bill in December 2024 that would require issuers to hold reserves against circulating supply. The bill also grants the HKMA authority to grant stablecoin licenses.
Urgency for Pro-Crypto Policies
On Feb. 5, Hong Kong lawmaker Johnny Ng called on the government to introduce more pro-crypto policies. He emphasized that Hong Kong needs to act fast, especially with the U.S. under the Trump administration moving towards more crypto-friendly legislation.
Whereas Hong Kong is still developing its regulatory landscape, its focus on tokenization and stablecoins could potentially make it a desirable leading global crypto hub.
