Hong Kong’s RMB Tokenized Bonds and the Future of On-Chain Capital Markets

Hong Kong’s emergence as a global hub for blockchain-based capital markets is reshaping the landscape of fixed-income investing. The recent issuance of the world’s first public RMB tokenized bond on Ethereum—FTID TOKEN 001 by Futian Investment—marks a pivotal moment in the integration of public blockchain technology with regulated financial systems [1]. This 500 million RMB, two-year bond, offering a 2.62% annual interest rate, is not just a technical milestone but a strategic move to diversify institutional portfolios and enhance liquidity in RMB-denominated assets [2].

Institutional Adoption and Regulatory Innovation

Hong Kong’s regulatory framework has been instrumental in fostering this innovation. The August 2025 implementation of the Stablecoins Ordinance, which mandates 100% reserve backing for stablecoin issuers and aligns with Basel capital requirements, has created a robust environment for institutional participation [3]. This clarity has spurred the launch of the first tokenized RMB money market fund by China Asset Management, offering yield-generating opportunities for both institutional and retail investors [4]. Such products are now distributed through traditional banks, brokerages, and licensed virtual asset platforms, expanding access to a broader investor base [5].

The government’s commitment to tokenization is further evident in its third batch of tokenized green bonds, building on successful 2023 and 2024 issuances. These bonds, settled via distributed ledger technology (DLT), reduce settlement times from days to minutes while automating coupon payments and corporate actions [6]. Regulatory incentives, such as potential stamp duty exemptions for tokenized exchange-traded funds, underscore Hong Kong’s ambition to normalize tokenized bond issuance as part of its debt strategy [7].

Strategic Diversification and Risk-Return Advantages

Tokenized RMB bonds present unique advantages for strategic asset diversification. Traditional onshore CNY bonds, such as China Government Bonds, have historically offered low correlation with global equity and fixed-income markets, providing resilience during periods of volatility [8]. For example, during the 2021–2023 US treasury sell-off, China Government Bonds delivered positive USD returns, contrasting with the negative performance of US treasuries [9]. Tokenized bonds amplify this diversification potential by introducing fractional ownership, 24/7 trading, and near-instant settlement, which reduce counterparty risks and transaction costs [10].

Moreover, blockchain technology enables real-time liquidity and transparency, critical for institutional investors seeking to optimize capital deployment. Unlike traditional bonds, which often face illiquidity due to large denominations and limited secondary market activity, tokenized bonds can be traded frequently with lower barriers to entry [11]. Smart contracts further automate compliance and interest payments, minimizing administrative overhead [12].

Challenges and Future Outlook

Despite these benefits, challenges remain. Regulatory uncertainty in cross-border tokenized asset transfers and technological integration hurdles must be addressed to scale adoption [13]. However, Hong Kong’s proactive approach—such as the launch of an RWA platform in August 2025 to streamline tokenized asset management—demonstrates a commitment to overcoming these barriers [14].

The projected growth of the tokenized bond market to $1 trillion by 2028 [15] suggests that institutional investors are increasingly recognizing the strategic value of blockchain-based fixed income. As Hong Kong continues to bridge traditional capital markets with on-chain infrastructure, RMB tokenized bonds are poised to play a central role in the global shift toward digital finance.

Source:
[1] Hong Kong launches the first public bond on Ethereum [https://en.cryptonomist.ch/2025/09/01/hong-kong-launches-the-first-public-bond-on-ethereum-500-million-rmb-all-the-details/]
[2] Hong Kong issues world's first offshore yuan tokenised public bond [https://amp.scmp.com/business/banking-finance/article/3323951/hong-kong-issues-worlds-first-offshore-yuan-tokenised-public-bond]
[3] Hong Kong's Evolving Crypto Ecosystem: Strategic Entry Points for Institutional Investors [https://www.ainvest.com/news/hong-kong-evolving-crypto-ecosystem-strategic-entry-points-institutional-investors-regulated-market-2508/]
[4] World's first RMB tokenized money fund launched in Hong Kong [https://www.chinadailyhk.com/hk/article/616144]
[5] Hong Kong Implements New Regulatory Framework for Stablecoins [https://www.sidley.com/en/insights/newsupdates/2025/08/hong-kong-implements-new-regulatory-framework-for-stablecoins]
[6] An ESG first? The Hong Kong Government Issues Tokenised Green Bonds in a Worldwide Premier [https://www.hoganlovells.com/en/publications/an-esg-first-the-hong-kong-government-issues-tokenised-green-bonds-in-a-worldwide-premier]
[7] Hong Kong prepares third batch of tokenized bonds, eyes digital asset strategy [https://cointelegraph.com/news/hongkong-tokenized-bonds-digital-asset-strategy]
[8] China Bonds: Diversification potential beyond the Dollar [https://www.ubs.com/global/en/assetmanagement/insights/asset-class-perspectives/fixed-income/articles/china-bonds.html]
[9] Tracker of New FinTech Applications in Bond Markets » ICMA [https://www.icmagroup.org/fintech-and-digitalisation/fintech-resources/tracker-of-new-fintech-applications-in-bond-markets/]
[10] Tokenized Bonds: The Future of Fixed-Income Investments [https://www.debutinfotech.com/blog/what-are-tokenized-bonds]
[11] The Future of Tokenized Bonds: Unlocking Liquidity in Fixed-Income Markets [https://kensoninvestments.com/the-future-of-tokenized-bonds-unlocking-liquidity-in-fixed-income-markets/]
[12] A New Frontier for Debt Restructuring and Capital Innovation [https://www.ainvest.com/news/tokenization-real-world-assets-china-struggling-property-sector-frontier-debt-restructuring-capital-innovation-2509/]
[13] Hong Kong's Strategic Crypto Adoption and Its Impact on Institutional Investment [https://www.ainvest.com/news/hong-kong-strategic-crypto-adoption-impact-institutional-investment-2509/]
[14] Hong Kong launches RWA platform to streamline tokenized asset management [https://www.hkma.gov.hk/eng/news-and-media/press-releases/2025/08/20250825-5/]
[15] Futian Investment Issues $69M RWA Bond on Ethereum in Hong Kong Debut [https://coincentral.com/futian-investment-issues-69m-rwa-bond-on-ethereum-in-hong-kong-debut/]