Written by: Lily Z. King
Editor's note: An article by Cobo COO Lily Z. King was published on July 3rd on the South China Morning Post website, analyzing how Hong Kong is seizing opportunities in the global tokenization competition. The article points out that as real-world asset (RWA) tokenization accelerates into the mainstream, Hong Kong is building a new generation of financial infrastructure with a clear regulatory framework, open market strategies, and proactive policy innovations. In the second half of this competition, the key will no longer be policy orientation, but whether products truly meet market demand.
On July 8, Lily Z. King at the Hong Kong Deloitte Digital Asset Forum
Participants include officials and industry representatives from Hong Kong's Financial Secretary, the Securities and Futures Commission, the Legislative Council, and the Monetary Authority.
When Larry Fink, Chairman of BlackRock, wrote in his annual letter to shareholders, 'Every stock, every bond, every fund—every type of asset can be tokenized,' he was not predicting a distant transformation, but rather a shift that is already happening—an evolution reshaping the ways 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: tokenization of real-world assets (RWA). Today, over $24 billion of RWA is circulating on public chains, covering yield-generating US Treasuries, private credit pools, tokenized commodities, and real estate. What was once viewed as a 'crypto curiosity experiment' is now becoming 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 who will shape it.
In the Digital Asset Development Policy Statement 2.0 released on June 26, Hong Kong expressed its intention to take the lead.
The statement launched the 'Leap' regulatory framework, expanding the scope of regulation to 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', 'Tokenized Product Expansion', 'Application Scenario Advancement', and 'People and Partnership Development'. 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 tokenization of various assets from precious metals to renewable energy infrastructure.
But perhaps the most significant change lies not in what specific regulations the policy governs, but in how it defines tokenization—as a core pillar of new financial infrastructure rather than a sandbox experiment. This alone distinguishes Hong Kong from other markets.
In contrast, Singapore has taken 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 suitability rules, thus expanding potential market space.
Compared to the EU's normative framework for crypto assets and the fragmented regulatory tug-of-war in the US, Hong Kong provides a more unified, principle-based system that offers the clarity innovators and investors need.
However, simply laying the tracks does not mean 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 5th, 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 initial public offering.
Photo: Reuters
Too many tokenization projects have realized this through pitfalls: the technology is fine, but the market does not buy in. Many products are ultimately shelved due to a lack of distribution channels, market demand, or actual relevance. The bottleneck lies not in technology or regulation, but in whether real commercial value exists. The real test is whether a particular tokenized asset truly solves a problem for a clearly defined user group.
Of course, there are also projects that 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 lacking secure income channels.
Similarly, protocols like Maple Finance have opened new paths in the private credit sector by matching institutional borrowers with crypto-native lenders, achieving on-chain transparent risk control that makes products bi-directionally available.
These successes do not stem from novel technologies, but from the perfect alignment of assets, users, and packaging methods.
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 station infrastructure, and supply chain finance. These projects hold considerable potential, but a blockbuster project that can truly integrate the three elements of assets, audience, and use cases on a large scale has yet to appear.
All elements are in place, what is needed next is 'market traction'. Hong Kong has laid a solid foundation: clear regulations, institutional recognition, and credible projects of public-private collaboration are continuously advancing. Hong Kong is increasingly viewed as a safe and clearly structured experimental environment for digital assets, and its potential as a 'bridgehead' for China's digital asset strategy makes its significance extend far 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 yielding stablecoin products? Can it connect China's industrial assets to global capital through compliant digital packaging? Can it nurture a new generation of RWA products that are not only legal and compliant but also truly in demand?
These questions will determine whether RWA is just a trend or can become a lasting transformation; it will also decide whether Hong Kong can become the global hub for tokenization in this new era. If successful, Hong Kong will not only be a leader but also one of the definers of future financial forms.
