Hong Kong Accelerates Virtual Asset Licensing and Tokenization Expansion

Hong Kong is moving swiftly to enhance its digital asset framework, aiming to fast-track virtual asset licensing and expand tokenization initiatives across multiple sectors. In a recent Legislative Council written reply, Secretary for Financial Services and the Treasury Christopher Hui outlined the government’s plans to strengthen the regulatory environment for virtual assets, reflecting a broader strategy to position the city as a global leader in digital finance.

The Stablecoin Ordinance, set to take effect on August 1, 2025, finalizes a regulatory framework that complements the licensing regime introduced in June 2023 for virtual asset trading platforms. As of January 2025, the Securities and Futures Commission (SFC) has adopted an expedited licensing process for new applicants, involving risk-based on-site inspections and external assessments. Eleven platforms have already received licenses, while another nine are under review [1].

Hong Kong is also broadening its digital infrastructure by extending regulatory sandboxes to include blockchain, tokenization, and AI applications, allowing firms to conduct trials under controlled conditions. The Hong Kong Monetary Authority (HKMA) is preparing a third tokenized green bond issuance following successful 2023 and 2024 launches. The SFC has also approved tokenized investment products for retail investors, such as gold tokens and money market funds. Future plans include exploring tokenization of real estate and private equity, with the HKMA’s Project Ensemble working on infrastructure to support tokenized deposits [1].

Cross-border cooperation remains a key pillar of Hong Kong’s strategy. Hui emphasized the city’s ongoing engagement with global standard-setting bodies, including the Financial Action Task Force (FATF) and the International Monetary Fund (IMF), as well as Mainland institutions like the PBOC’s Digital Currency Research Institute. These efforts aim to strengthen anti-money laundering coordination and regulatory alignment with international standards. Hong Kong is also participating in the FATF’s Virtual Assets Contact Group to assess evolving risks and enhance international cooperation [1].

Amid growing competition from Singapore and the U.S., which are also developing robust stablecoin frameworks, Hong Kong’s ability to attract institutional investment will depend on its capacity to balance regulatory efficiency with innovation. The city’s digital asset strategy is also supported by cross-border trade finance initiatives, with tokenized instruments potentially facilitating faster and more transparent corporate financing. GF Securities and HashKey Group have already launched tokenized securities denominated in U.S. dollars, Hong Kong dollars, and offshore yuan [1].

Analysts suggest that tokenization could revolutionize traditionally illiquid sectors such as real estate and infrastructure by enabling fractional ownership and improving liquidity. Additionally, cooperation with Mainland institutions could position Hong Kong as a testbed for yuan-backed stablecoin pilots in global markets [1].

As the regulatory landscape evolves, Hong Kong’s proactive approach to digital assets underscores its ambition to remain competitive in the global financial ecosystem.

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Source: [1] Hong Kong Targets Faster Virtual Asset Licensing, Broader Tokenization (https://cryptonews.com/news/hong-kong-fast-tracks-virtual-asset-licensing-tokenization/)