What Is Real-World Asset (RWA) Tokenization?
Real-World Asset (“RWA”) tokenization may be rapidly transforming modern finance. In simple terms, tokenization is the process of converting an asset with monetary value into a digital token, enabling its representation and transaction on blockchains. RWA tokens are tokens that represent the value of tangible or intangible assets brought on-chain, allowing them to be utilized or traded via blockchain ecosystem, including decentralized finance (DeFi) protocols.
Generally, any asset with a well-defined value can be tokenized. Examples of assets that can be tokenized may include real estate, commodities like gold and metals, intellectual property, receivables and art, to name a few.
Through tokenization, these assets may become tradable digital tokens, fundamentally changing how investors access and manage assets. This process allows assets to be divided into smaller digital units. In other words, investors can purchase fractions of an underlying asset, lowering the investment threshold and increasing market accessibility. In addition, blockchain technology may streamline processes, making the ownership, trading and management of these assets faster, safer and more transparent. As a result, both issuers and investors enjoy greater flexibility and opportunities that traditional financial systems cannot offer.
Hong Kong’s Regulatory Framework
Hong Kong has been establishing a progressive and comprehensive regulatory framework that may support RWA tokenization across multiple dimensions. The following sections highlight the principal measures and initiatives introduced by Hong Kong to support this emerging and innovative finance and investment technology.
1. Licensing Regimes for Virtual Asset Trading Platforms (VATPs)
The Hong Kong government has implemented virtual asset related regulations and licensing regimes for the virtual asset exchanges. Centralized virtual asset trading platforms (“VATPs”) in Hong Kong are generally licensed and regulated by the Securities and Futures Commission (“SFC”). The key laws governing virtual assets and VATPs are:
- Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), amended by its 2022 Amendment Ordinance (collectively referred to as “AMLO”)
- Securities and Futures Ordinance (Cap. 571) (“SFO”)
Generally, VATPs offering trading in security tokens are required to obtain Type 1 (dealing in securities) and Type 7 (providing automated trading services) licenses under the SFO. On the other hand, those offering non-security tokens are required to obtain a virtual asset service license under the AMLO.
Hong Kong’s robust licensing regimes provide significant regulatory certainty by clearly defining compliance requirements for virtual asset exchanges. Furthermore, the framework may provide investors with investor protection measures. These regimes provide regulatory clarity and opportunities for both issuers and investors wishing to engage in RWA tokenization opportunities.
2. Regulatory Circulars
Hong Kong regulators have issued circulars providing detailed regulatory guidance on tokenization. These cover, among others, key areas such as:
- Tokenization of SFC-authorized investment products
- SFC-authorized funds with exposure to virtual assets
- Intermediaries’ engagement in tokenized securities-related activities
- Intermediaries’ virtual asset related activities
These circulars may provide additional clarity and compliance guidelines for businesses and intermediaries engaging in tokenization activities. Together with the aforementioned licensing regimes, they may give investors confidence to purchase tokenized RWAs from licensed VATPs and/or licensed intermediaries, knowing the Hong Kong’s regulated RWA tokenization environments are more secure and reliable. Likewise, they may motivate issuers to launch tokenized assets, assured by more trusted and compliant infrastructure.
3. Stablecoins Ordinance
With the Stablecoins Ordinance (Cap. 656) effective from 1 August 2025, generally speaking, any entity issuing fiat-referenced stablecoins in Hong Kong is required to obtain a license from the Hong Kong Monetary Authority (“HKMA”).
This requirement is significant because stablecoins may be able to play a crucial role in the growth of RWA tokenization. While investors may be able to trade tokenized RWAs with fiat currency, although currently in limited volume and with some hurdle, stablecoins often represent a superior option. They deliver the speed, transparency and 24/7 accessibility of blockchain transactions, while designed to maintain a stable value pegged to fiat money. With clear licensing rules and HKMA oversight, issuers can try to design tokenized RWA products incorporating stablecoins for settlement, without the risk of regulatory breaches.
4. Hong Kong’s New Policy Statement in June 2025
In June 2025, Hong Kong released a policy statement outlining its plans to, among other plans, expand the RWA tokenization. The Financial Services and the Treasury Bureau (FSTB) and the HKMA will conduct a review of existing frameworks to facilitate RWA tokenization. The policy aims to:
- Broaden the types of tokenized products available
- Standardize tokenized government bond issuance
- Clarify tax rules for tokenized exchange-traded funds (ETFs)
- Support secondary market trading of tokenized assets
Through these potential improvements, Hong Kong is strengthening its global competitiveness and laying a strong foundation for the development of RWA tokenization.
5. Government Initiatives in Tokenized Bonds
Hong Kong is also at the forefront of tokenized bond issuance, demonstrating practical applications of RWA tokenization in the traditional financial sector.
(a) Project Genesis and Project Evergreen
The HKMA first explored tokenized bond issuance through Project Genesis in 2021, which concept-tested tokenized green bonds in Hong Kong. Building on this success, in 2022, Project Evergreen examined the financial infrastructure, legal and regulatory environment for using distributed ledger technology (“DLT”) throughout the bond lifecycle.
Importantly, the HKMA has documented various aspects of these projects and shared insights with the industry. For example, it published a report titled “Bond Tokenisation in Hong Kong” in 2023 to outline useful considerations and options for tokenized issuances.
These projects together with the HKMA’s publication may serve as comprehensive blueprints for market participants adopting tokenization. They can not only clarify design, legal frameworks and operational workflows, but also may turn theories or ideas into practical implementation. As a result, issuers and intermediaries may have a clear roadmap for planning, executing and scaling digital bond offerings.
(b) Pioneering Tokenized Green Bonds
The Hong Kong Government achieved several global milestones, including:
- Issuance of the world’s first tokenized government green bond in February 2023.
- Issuance of the world’s first multi-currency digital bond in February 2024.
Collectively, these cutting-edge achievements illustrate Hong Kong’s commitment to promoting capital and finance market innovation through tokenization. By leading successful pilot projects, the government may have reduced skepticism among investors and intermediaries, promoting confidence in tokenized financial instruments. Consequently, issuers can leverage these proven frameworks and experiences to tokenize bonds or other RWAs efficiently and compliantly.
(c) Digital Bond Grant Scheme
To incentivize bond tokenization, the HKMA launched Digital Bond Grant Scheme which offers financial incentives of up to HK$2.5 million per eligible issuance. You can find more details about this scheme in our previous article here. This government subsidy scheme reduces digital bonds issuance costs, thereby lowering barriers for issuers who wish to explore and implement bonds tokenization in Hong Kong.
Getting Started with RWA Tokenization
Hong Kong’s robust regulatory frameworks, practical compliance guidelines and government support systems offer a comprehensive and supportive environment for RWA tokenization in Hong Kong. It provides all the ingredients necessary for compliant, efficient and innovative tokenization projects.
Are you considering launching a RWA tokenization project in Hong Kong? Our law firm’s specialist FinTech team are here to help. We advise on all aspects of structuring, licensing, compliance and market entry for RWA tokenization in Hong Kong.
Contact us to unlock the value of your real-world assets.
Co-Authors: Jay Lee and Shirley So