HONG KONG SAR, CHINA Trends and Developments Contributed by: Sam Wu and Beverly Fu, YYC Legal LLP
innovation, solidifying Hong Kong’s foundation for the next phase of digital asset development. Tokenisation of real-world assets (RWAs) Beyond the realm of digital-native assets, Hong Kong is aggressively developing the tokenisation of RWAs, strategically bridging the gap between traditional finance and blockchain technology. In this context, a “real-world asset” refers to a physical asset or a traditional financial asset that is represented digitally on a blockchain. These assets encompass a vast spectrum, from financial instruments such as equi - ties, bonds, and funds, to tangible assets like real estate, intellectual property, natural resources, art, and income streams. By converting these into digi - tal tokens, the tokenisation of RWAs aims to unlock liquidity, enhance efficiency, and democratise access to investment opportunities. SFC guidance The SFC has provided crucial guidance on tokenised securities-related activities and SFC-authorised investment products. While this guidance focuses on the issuance of tokenised financial products such as green bonds, commercial papers, warrants, and funds, it offers valuable insights applicable to the broader RWA landscape. The SFC’s fundamental stance is that tokenised financial products are funda - mentally traditional financial products with a tokeni - sation wrapper, meaning existing legal and regulatory requirements for securities markets apply equally to them. Intermediaries play a critical role in the RWA tokeni - sation ecosystem, including product providers, fund managers, and distributors. The SFC guidance mandates that product providers remain ultimately responsible for the entire tokenisation arrangement, regardless of any outsourcing of technical functions like smart contract audits or ledger maintenance. They must conduct thorough due diligence on issuers, the underlying products, and third-party service provid - ers, and ensure proper records of token holders’ ownership interests are maintained. Robust measures are required to manage cybersecurity risks, data pri - vacy, and system outages, with specific restrictions on using public-permissionless blockchain networks without additional controls. Furthermore, adequate
disclosure regarding the tokenisation arrangement, settlement finality, and associated risks is mandatory. Project Ensemble On the infrastructure front, the HKMA launched the Project Ensemble Sandbox in August 2024. This groundbreaking initiative is designed to explore inno - vative financial market infrastructure that allows seam - less interbank settlement of tokenised money through a wholesale central bank digital currency (wCBDC). The Project Ensemble Sandbox focuses on four key themes: fixed income and investment funds, liquid - ity management, green and sustainable finance, and trade and supply chain finance. It enables indus - try participants to conduct end-to-end testing of tokenised asset transactions in practical business scenarios, examining the technical interoperability among tokenised assets, tokenised deposits, and wCBDC. This is a significant stride, as the ability to settle tokenised asset transactions instantaneously and irrevocably with tokenised money can eliminate settlement risk and unlock the full potential of tokeni - sation. Building on the successful outcomes of the Project Ensemble Sandbox, on 13 November 2025, the HKMA announced the new phase of Project Ensemble and launched EnsembleTX, which will operate throughout 2026. In this phase, the HKMA, participating banks, and other industry pioneers aim to enable faster, more transparent, and more efficient settlement of real-val - ue tokenised transactions. To empower market participants to utilise tokenised deposits in money market fund transactions and to manage liquidity and treasury needs in real time, inter - bank settlement of tokenised deposit transactions will initially be facilitated via the HKD Real-Time Gross Settlement system and will be progressively upgrad - ed and enhanced to support settlement in tokenised Central Bank Money on a 24/7 basis. Landmark projects The practical application of these frameworks is already visible through landmark projects. The first major RWA initiative to gain global attention was the Hong Kong government’s issuance of the world’s first
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