Hong Kong's Tokenised Bond Revolution: A Strategic Gateway for Global Investors

Hong Kong is rapidly cementing its status as a global leader in blockchain-enabled debt instruments, with tokenised bonds emerging as a cornerstone of its digital finance strategy. By 2025, the city has already executed two successful tokenised bond sales since 2023 and is preparing for a third offering, this time involving green bonds denominated in multiple currencies, including US dollars, Hong Kong dollars, euros, and offshore yuan, according to a Business Times report. These instruments leverage distributed ledger technology (DLT) for issuance and settlement, with platforms like HSBC's DLT and public blockchains such as Ethereum playing pivotal roles, as noted in the same Business Times report. Corporate participation has also surged, with at least six tokenised bonds issued in 2025 alone, raising a total of US$1 billion, according to the Business Times report. This momentum positions Hong Kong as a critical player in the global tokenised bond ecosystem, but how does it stack up against rivals like Singapore and Dubai?

The Competitive Landscape: Hong Kong vs. Singapore vs. Dubai

While Hong Kong's tokenised bond market is gaining traction, it faces stiff competition from Singapore and Dubai, both of which have made strategic advancements in digital assets. Singapore's tokenised securities market, valued at USD 1.4 billion in 2024, is projected to grow at a compound annual growth rate (CAGR) of 18.5%, reaching USD 6.5 billion by 2033, according to a LinkedIn post. This growth is fueled by Singapore's regulatory clarity, exemplified by the Monetary Authority of Singapore's (MAS) Securities and Futures Act (SFA) and its regulatory sandbox, which balances innovation with compliance, as described in a Ken Research report. Dubai, meanwhile, has leveraged its tax-free zones and the Virtual Assets Regulatory Authority (VARA) to foster a tokenised assets market valued at USD 17 billion as of early 2025, with a projected CAGR of 24.3% through 2030, according to the Ken Research report.

Hong Kong's advantage lies in its hybrid approach: combining regulatory experimentation with direct government participation. The city's government has issued tokenised green bonds totaling HKD 800 million in 2023 and plans to expand this with multi-currency offerings in 2025, according to a Titus report. Unlike Singapore's cautious regulatory environment or Dubai's opaque corporate structures, Hong Kong's market benefits from its role as a bridge to mainland China, offering unique access to a vast investor base, as noted in the Business Times report. However, challenges remain. Hong Kong's legal framework for tokenised bonds is still evolving, as existing regulations are largely designed for traditional bonds, according to the Business Times report.

Risk Assessments and Mitigation Strategies

Tokenised bonds inherently carry novel risks, including operational vulnerabilities and regulatory uncertainty. For instance, Hong Kong's government-issued digital bonds have received an AA+ rating from S&P, but the agency notes that contingency plans-such as transitioning to traditional systems in case of DLT disruptions-help mitigate operational risks, according to the Business Times report. Similarly, Singapore's Project Guardian initiative, which involves major institutions like HSBC and Euroclear, has established robust frameworks for asset tokenisation, reducing systemic risks, as described in a Yahoo Finance article. Dubai's VARA regulations, while supportive, face scrutiny over transparency and enforcement, particularly in free zones like the DMCC, as described in the Ken Research report.

Hong Kong's geopolitical risks, however, cannot be ignored. The city's economic health is intertwined with mainland China, and challenges in sectors like real estate-exemplified by New World's debt struggles-could indirectly impact investor confidence in its digital bond market, according to a Business Times report. Conversely, Singapore's geopolitical neutrality and Dubai's tax incentives provide alternative appeal for risk-averse investors.

Long-Term Investment Potential

For global investors, Hong Kong's tokenised bond market offers a compelling blend of innovation and institutional support. The city's Fintech 2030 strategy, which includes initiatives like the first Luxembourg-registered tokenised money market fund by Franklin Templeton, underscores its ambition to become a digital assets hub, according to a Yahoo Finance article. Meanwhile, Singapore's focus on institutional-grade tokenisation and Dubai's aggressive tax policies cater to different investor profiles.

The key differentiator for Hong Kong is its ability to scale rapidly. With four corporate tokenised bond offerings in 2025 alone and a government-led push for green bonds, the market is on track to surpass Singapore and Dubai in transaction volume within the next two years, according to the Business Times report. However, sustained growth will depend on regulatory clarity and the resolution of legal ambiguities surrounding tokenised instruments.

Conclusion

Hong Kong's tokenised bond revolution is not just a local phenomenon-it's a strategic gateway for global investors seeking exposure to blockchain-enabled debt instruments. While Singapore and Dubai offer competitive advantages in regulation and cost efficiency, Hong Kong's unique position as a bridge to China, coupled with its aggressive innovation, makes it a standout player. For investors, the critical question is not whether tokenised bonds will grow, but how quickly Hong Kong can solidify its leadership in this nascent market.