How can Hong Kong win the competition to become the "Global Tokenization Center"?

Written by: Lily Z. King

Editor’s Note: On July 3rd, the South China Morning Post website published an article by Cobo COO Lily Z. King, which delves into how Hong Kong is seizing opportunities in the global tokenization competition. The article points out that as the tokenization of real-world assets (RWA) accelerates into the mainstream, Hong Kong is building a new generation of financial infrastructure with a clear regulatory framework, an open market strategy, and proactive policy innovation. In the second half of this competition, the key will no longer be policy orientation, but whether the products truly meet market demands.

On July 8, Lily Z. King at the Deloitte Digital Assets Forum in Hong Kong

Participants include officials from the Hong Kong Financial Services and the Treasury Bureau, the Securities and Futures Commission, the Legislative Council, and the Monetary Authority, as well as industry organizations.

When BlackRock Chairman Larry Fink wrote in his annual letter to shareholders, "Every stock, every bond, every fund – every asset can be tokenized," he was not predicting a distant transformation, but rather describing a change that is already happening – an evolution that is reshaping the way capital is formed, assets are distributed, and financial opportunities are accessed.

At the core of this transformation is a concept that was once niche but is now rapidly entering the mainstream: Real World Asset Tokenization (RWA). Currently, over $24 billion of RWA is circulating on public chains, covering yield-generating U.S. Treasuries, private credit pools, tokenized commodities, and real estate, among others. What was once seen as a "crypto curiosity experiment" is now becoming a part of the global financial infrastructure — the underlying pipeline of capital markets is quietly being restructured.

So the question is no longer whether tokenization will reshape finance, but rather who will shape it.

In the "Digital Asset Development Policy Statement 2.0" released on June 26, Hong Kong expressed its intention to lead.

The statement introduced the "Leap" regulatory framework, expanding the regulatory scope to include stablecoin issuers, custodians, and RWA platforms. More importantly, it sends a clear signal: Hong Kong is not just "allowing tokenization, but is actively advocating for it.

"Leap" is an acronym for "Legal and Regulatory Simplification (Legal)", "Tokenized Product Expansion (Expand)", "Application Scenario Advancement (Advance)" and "People and Partnership Development (People and Partnership)". It promotes the formation of a broader vision by establishing a stablecoin licensing system, clarifying the regulatory framework for tokenized ETFs, and continuing previous pilots in digital bonds and green finance, encouraging the tokenization of various assets ranging from precious metals to renewable energy infrastructure.

But perhaps the most meaningful change is not what the policy specifically regulates, but how it defines tokenization—viewing it as a core pillar of new financial infrastructure rather than a sandbox experiment. This alone has set Hong Kong apart from other markets.

In contrast, Singapore has adopted a more cautious approach—focusing on institutional participation and restricting retail investors; while Hong Kong has chosen a broader and more inclusive path. It allows retail users to participate under the premise of setting clear appropriateness rules, thereby expanding the potential market space.

Compared to the EU's regulatory framework for the cryptocurrency market and the fragmented regulatory tug-of-war in the United States, Hong Kong offers a more unified, principles-based system that provides the clarity that innovators and investors need.

However, simply laying the tracks does not mean that the train can run on time. Issuing a tokenized asset is easy; the challenge lies in whether anyone is willing to hold, trade, and trust it.

On June 5, Jeremy Allaire (third from left), CEO and co-founder of Circle Internet Group, one of the world's largest stablecoin issuers, and Heath Tarbert (second from left), president of Circle, at the New York Stock Exchange on the day of the company's IPO.

Photo: Reuters

Too many tokenization projects realize this point only after hitting roadblocks: the technology is fine, but the market does not buy in. Lacking distribution channels, market demand, or real relevance, many products ultimately end up shelved. The bottleneck is not in the technology or regulation, but in whether business value truly exists. The real test is: does a particular tokenized asset genuinely solve a problem for a clearly defined user group?

Of course, some projects have passed this test and successfully expanded. For example, tokenized US Treasury products have gained widespread adoption among global savers due to their stable and transparent yields, especially in emerging markets that lack secure income channels.

For example, protocols like Maple Finance have opened new paths in the private credit space by matching institutional borrowers with crypto-native lenders, and achieving on-chain transparent risk control, making products bidirectionally available.

These successes do not come from novel technologies, but rather from the perfect match of assets, users, and packaging.

The local ecosystem in Hong Kong is also evolving in this direction. The Hong Kong Monetary Authority's "Project Ensemble" is experimenting with scenarios such as tokenized bonds, funds, carbon credits, charging infrastructure, and supply chain finance. These projects have significant potential, but a blockbuster project that can truly connect the three elements of assets, audience, and use cases on a large scale has yet to emerge.

All elements are in place, what is needed next is "market traction." Hong Kong has already laid a solid foundation: clear regulations, institutional recognition, and credible projects driven by public-private collaboration are continuously advancing. Hong Kong is increasingly being seen as a safe and well-structured experimental environment for digital assets, and its potential as a "gateway" for China's digital asset strategy gives it significance beyond the local market itself.

But the hardest part is just beginning. The next phase of competition will be determined by product-market fit rather than more policies. Can Hong Kong attract Southeast Asian savers to invest in truly profitable stablecoin products? Can it connect China's industrial assets to global capital through compliant digital packaging? Can it incubate a new generation of RWA products that are not only legal and compliant but also truly in demand in the market?

These issues will determine whether RWA is just a trend or can become a lasting transformation; it will also determine whether Hong Kong can become the global capital of tokenization in this new era. If successful, Hong Kong will not only be a leader but will also be one of the definers of future financial forms.