In early February 2026, Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), revealed that since the Stablecoin Issuers Ordinance came into effect, the HKMA had received license applications from a total of 36 institutions and was conducting in-depth assessments, with the goal of issuing the first batch of licenses in March of this year. He also emphasized that the approval process would adhere to the principle of "prudence and prudence," meaning that the initial number of licenses issued would be quite limited. Around the same time, Legislative Council member Ng Kit-chung further outlined the future regulatory blueprint, indicating that Hong Kong expects to launch a regulatory framework for digital asset custody and over-the-counter (OTC) trading by the end of 2026, and is studying the relaxation of trading restrictions for professional investors.
These two closely related messages are not isolated technical announcements. Together, they signify that Hong Kong's virtual asset regulation is moving from a "point-based breakthrough" targeting a single business model (stablecoins) to building a "systematic project" covering the entire chain of "issuance-custody-circulation." Its deeper goal is to pave a solid and reliable compliance path for innovations like Real-World Assets (RWAs) that require strong financial trust backing.
If the previous narrative of cryptocurrencies was about "asset creation," then the next wave, represented by RWA, is centered on "asset connectivity"—the reliable and efficient introduction of trillions of dollars worth of traditional financial assets into the digital world. Hong Kong is meticulously deploying the essential infrastructure for this connectivity initiative: compliant stablecoins are the "lifeblood" of value flow, professional custody is the "anchor" of asset security, and the regulated OTC market is the "gateway" for large-scale capital inflows and outflows. This "iron triangle" of three is attempting to answer a crucial question: when the rights to a building, a bond, or a series of supply chain receivables are converted into on-chain tokens, why would institutional investors dare to hold significant positions?
This article will delve into the underlying logic and progressive relationship of Hong Kong's series of regulatory measures. We will see that Hong Kong's strategy is far from a simple opening up or encouragement, but rather a prudent "stress test" and "standard setting," with the ultimate goal of incorporating RWA into the global mainstream financial narrative and balance sheets under controllable conditions.
1. Which types of RWA assets does the Hong Kong market favor?
Hong Kong's RWA market exhibits a clear development trajectory, primarily focusing on asset classes with stable cash flow and relatively clear legal relationships. Current market practices can be broadly categorized into three main models.
The first type is the tokenization of revenue rights, exemplified by China Resources Longdi's electric vehicle charging station project. The core value of this type of asset lies in its predictable future cash flow, which is divided into smaller investment units using blockchain technology, lowering the traditionally high barrier to entry for this type of infrastructure investment.
The second category is accounts receivable and supply chain finance assets, such as the practice of Shengye Holdings. This type of RWA transforms a company's accounts receivable into on-chain, transferable, and financeable digital certificates, directly solving the financing difficulties of SMEs and improving capital turnover efficiency.
The third category involves partial ownership of physical assets, including commercial real estate and high-end artworks, which are currently under exploration. This type of practice faces more complex challenges in legal ownership confirmation and valuation, and is currently mostly in the design or small-scale pilot stages.
Christopher Hui, Hong Kong's Secretary for Financial Services and the Treasury, mentioned the exploration of tokenization of international shipping charter fees, which further reveals the regulatory approach—prioritizing support for "interest-bearing assets" that generate continuous cash flow, rather than "store-of-value assets" that simply rely on value fluctuations.
II. What are the three unique advantages of Hong Kong in developing RWA?
Hong Kong's competitive advantage in developing the Free Trade Area (RWA) is not a single policy, but a complete ecosystem. At the core of this system is the triple combination of the common law system, free flow of capital, and international financial talent.
The common law system provides RWA with flexible legal adaptability. In the process of asset tokenization, cutting-edge issues such as ownership division and the legal validity of smart contracts are involved. The common law case law tradition can gradually establish rules through specific cases, rather than waiting for an all-encompassing written law.
The free flow of capital is key to attracting global investment. When a tokenized Hong Kong commercial real estate fund needs to be issued to investors in Singapore, Europe, or the Middle East, Hong Kong's open capital account ensures the ease of capital inflows and outflows, an advantage that many jurisdictions cannot match.
The Hong Kong Financial Services and the Treasury Bureau's emphasis on the "super value-added agent" positioning in its policy communications is based on these institutional endowments. Hong Kong is not simply replicating the practices of other markets, but rather combining its own advantages to create a RWA development path that is both internationally recognized and locally distinctive.
III. What hurdles must RWA overcome for large-scale development?
Despite its promising prospects, RWA's large-scale development in Hong Kong still faces structural challenges. These challenges mainly stem from three aspects: legal ownership, liquidity difficulties, and accounting and tax treatment.
From a legal perspective, the primary challenge is how to fully and uncontroversially map the rights to real-world assets onto on-chain tokens. While partial ownership of a building can be defined through traditional legal documents, its legal validity, transfer rules, and breach of contract handling after being converted into on-chain tokens require new legal interpretations and practices.
Liquidity is a more pressing issue. Even if assets are successfully put on the blockchain, investors will face difficulties exiting without an active secondary market. Currently, most RWA products still adopt a hold-to-maturity or negotiated transfer model, lacking a public and continuous pricing and trading mechanism.
Accounting and tax treatment are key factors influencing institutional participation. How should tokenized assets be presented on the balance sheet? What tax jurisdictions are involved in cross-border transactions? Ambiguity in these questions can deter conservative institutional investors such as insurance companies and pension funds from entering the market.
The Hong Kong Monetary Authority's emphasis on "prudence and prudence" in its stablecoin license review reflects a clear understanding of these challenges. The regulator understands that rapid market expansion could sow the seeds of systemic risk before these fundamental issues are resolved.
IV. A Three-Stage Vision for the Development of RWA in Hong Kong
Given the current situation and challenges, the Hong Kong RWA market may develop along a gradual path. This path can be roughly divided into three stages: the inter-institutional market, the professional investor market, and the mature mass market.
We are currently in the transition period from the first stage to the second stage. The main characteristics of this stage are private placement, institutional dominance, and limited liquidity. Product design is relatively simple, information disclosure requirements are high, and transactions are mainly completed through negotiated transfers or small exchanges.
With the custody and OTC regulatory framework gradually taking shape by 2026, the market will enter its second phase. This phase is characterized by the emergence of regulated trading venues, more standardized product structures, and increased participation from professional investors. Liquidity will improve, and product complexity can be moderately increased.
The third phase depends on the maturity of multiple conditions, including further improvement of the legal framework, clarification of tax policies, and substantial enhancement of market depth. At that time, some highly standardized RWA products may be able to be opened to a wider range of qualified investors.
The suggestion by Hong Kong Legislative Council member Ng Kit-chung to "study the relaxation of trading restrictions for professional investors" embodies this gradual approach. Regulation is not simply about opening up or prohibiting, but rather about gradually adjusting participation thresholds and product ranges based on market maturity.
V. Who is jointly building Hong Kong's RWA ecosystem?
The healthy development of the RWA ecosystem requires collaboration from multiple participants. In Hong Kong, this ecosystem is primarily built by three types of entities: traditional financial institutions, fintech companies, and regulatory agencies.
Traditional financial institutions, especially large banks and asset management companies, play the role of credit intermediaries and capital providers. They leverage their reputation and customer networks to help screen high-quality assets, design product structures, and attract initial investors. International banks such as HSBC and Standard Chartered are already exploring the use of blockchain technology to improve trade finance and supply chain finance.
Fintech companies are key to both technological implementation and operational support. They provide technical solutions for asset tokenization, develop trading platforms, and design smart contract frameworks. These companies are often more flexible and can iterate products quickly, but they need to collaborate with traditional financial institutions to gain market trust.
In this ecosystem, regulators are not only rule-makers, but also innovation coordinators and risk guardians. Through regulatory sandboxes, task forces, and other mechanisms, Hong Kong's regulators maintain close communication with the industry, understanding both the needs for innovation and the boundaries of risk.
This tripartite collaborative model ensures that innovation remains true to the essence of finance, while traditional finance can gradually absorb new technologies and new thinking. The division of labor and cooperation between the Hong Kong Monetary Authority and the Securities and Futures Commission in the regulation of virtual assets is a manifestation of this collaborative governance.
VI. How can Hong Kong connect mainland assets with global capital?
In a broader context, Hong Kong's RWA development is part of regional financial cooperation and competition. Its unique value lies in its ability to connect mainland China's real assets with global capital markets.
Mainland China boasts the world's richest real economy landscape and asset stock—from manufacturing accounts receivable and infrastructure revenue rights to commercial real estate and intellectual property. However, there is still room for improvement in the securitization and internationalization of these assets.
Hong Kong can serve as a "compliance converter." Mainland China's physical assets can be restructured, packaged, and tokenized through Hong Kong's financial and legal framework, transforming them into investment products that meet international standards, and then issued to global investors. In this process, Hong Kong not only provides the channel but also offers professional services in credit enhancement and risk pricing.
Meanwhile, Hong Kong is also developing a relationship of both competition and complementarity with other financial centers such as Singapore and Dubai. Singapore has advantages in wealth management and fund establishment; Dubai is at the forefront in attracting Middle Eastern capital and exploring the integration of Islamic finance and digital assets.
Hong Kong's differentiated advantage lies in its dual gateway status, backed by the mainland and facing the world. In the development plan for the Guangdong-Hong Kong-Macao Greater Bay Area, Hong Kong has been tasked with building an international financial hub, and RWA is precisely the concrete practice of this mission in the digital age.
When a European pension fund considers allocating assets to Asian infrastructure, it may no longer need to directly purchase shares in physical projects, but instead acquire standardized digital rights through RWA products issued in Hong Kong. The Hong Kong Monetary Authority's prudent regulation of stablecoins ensures the credibility of payment settlements; upcoming custody rules guarantee the security of asset custody; and the improvement of the OTC framework provides a compliant channel for large-scale transactions.
Hong Kong's goal is not to become an offshore haven for cryptocurrencies, but to build a trusted financial infrastructure for the next trillion-dollar asset class—RWA. This process will inevitably be gradual and cautious, but each step will reshape the pathways connecting traditional assets with global capital.
Some of the information comes from the following sources:
• Christopher Hui, Financial Secretary of Hong Kong: The Stablecoin Ordinance was officially implemented last August, and the Hong Kong Monetary Authority is currently processing related license applications.
• Davos Forum: Hong Kong outlines a new path for fintech and promotes the development of a gold trading hub
• Hong Kong Legislative Council member: Hong Kong will introduce custody and OTC-related regulations this year, and will study relaxing trading restrictions for professional investors.
Author: Liang Yu; Editor: Zhao Yidan
