Editor’s note: On July 3, the South China Morning Post published an article by Cobo COO Lily Z. King, which delves into how Hong Kong is seizing the initiative 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 strategy, and proactive policy innovation. In the second half of this competition, the key will no longer be policy direction but whether products genuinely fit market demand.
On July 8, Lily Z. King spoke at the Deloitte Digital Assets Forum in Hong Kong.
Participants included officials from Hong Kong's Financial Services and the Treasury Bureau, the Securities and Futures Commission, the Legislative Council, and the Monetary Authority, along with industry institutions.
When Larry Fink, Chairman of BlackRock, 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 describing a change that is already happening—an evolution 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). Today, over $24 billion of RWA is circulating on public chains, covering income-generating U.S. Treasury bonds, private credit pools, tokenized commodities, and real estate. Attempts once seen as a 'cryptocurrency curiosity experiment' are now becoming part of the global financial infrastructure—the underlying channels of capital markets are 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 lead.
The statement launched the 'Leap' regulatory framework, expanding the regulatory scope 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 abbreviation for 'Legal and Regulatory Simplification', 'Tokenized Product Expansion', 'Application Scenario Advancement', and 'People and Partnership Development'. It promotes a broader vision by establishing a stablecoin licensing system, clarifying the regulatory framework for tokenized ETFs, and continuing previous pilot projects in digital bonds and green finance to encourage the tokenization of various assets, from precious metals to renewable energy infrastructure.
But perhaps the most meaningful change is not what specific policies regulate, but how they define tokenization—as a core pillar of new financial infrastructure rather than a sandbox experiment. Just this alone has distinguished Hong Kong from other markets.
In contrast, Singapore has taken a more cautious approach—focusing on institutional participation while restricting retail investors; whereas Hong Kong has chosen a broader and more inclusive path. It allows retail users to participate under clear suitability rules, thus expanding the potential market space.
Compared to the EU's regulatory framework for cryptocurrency markets and the fragmented regulatory tug-of-war in the U.S., Hong Kong provides a more unified, principles-based system, offering innovators and investors the clarity they need.
However, simply laying the tracks does not mean the train will 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 initial public offering.
Photo: Reuters
Too many tokenization projects realize this only through pitfalls: the technology is fine, but the market does not buy in. Lacking distribution channels, market demand, or actual relevance, many products ultimately get shelved. The bottleneck is not technology, nor regulation, but whether there is genuine commercial value. The real test is whether a tokenized asset truly solves a problem for a clearly defined user group.
Of course, some projects have passed this test and successfully expanded. For instance, tokenized U.S. Treasury products have gained widespread adoption among global savers for providing stable and transparent returns, especially in emerging markets that lack secure income channels.
For example, protocols like Maple Finance have opened new pathways in the private credit sector by matching institutional borrowers with crypto-native lenders and achieving on-chain transparent risk control, making the products mutually accessible.
These successes do not stem from novel technologies but from the perfect match between 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 tokenized bonds, funds, carbon credits, charging infrastructure, and supply chain finance scenarios. These projects hold great potential, but a blockbuster project that can truly connect assets, audiences, and usage scenarios on a large scale has yet to emerge.
All elements are now in place; what is needed next is 'market traction'. Hong Kong has laid a solid foundation: clear regulation, institutional recognition, and credible projects driven by public-private collaboration are continually advancing. Hong Kong is increasingly seen as a safe, clearly structured digital asset experimental environment, and its potential as a 'bridgehead' for China's digital asset strategy makes its significance far exceed 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 Chinese 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 genuinely in demand in the market?
These questions will determine whether RWA is merely a trend or can become a lasting transformation; they 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 also one of the definers of future financial forms.
