The first retail tokenized fund in the Asia-Pacific region issued in Hong Kong: How Blockchain is reshaping the asset management landscape

On February 13, 2025, a Chinese-funded asset management company announced that its Hong Kong dollar digital currency fund received approval from the Hong Kong Securities and Futures Commission, becoming the first tokenized fund in the Asia-Pacific region aimed at retail investors, officially listing on February 28. This is the first retail tokenized fund approved since Hong Kong issued a relevant circular in November 2023, marking an important breakthrough in the transition of tokenized assets from institutional exclusivity to the mass market.

Tokenization refers to the process of converting the rights of real-world assets into digital tokens on the blockchain. A tokenized fund is one where fund shares are "on-chained" as digital tokens, with ownership of the fund represented by these tokens, where one token represents one unit or share of the fund.

Although tokenization funds do not significantly differ from traditional funds in essence, they are innovative in terms of ownership attribution, information transparency, and trading models, as they are built on blockchain technology.

1. Ownership records are more transparent and tamper-proof.
2. Transaction settlement is faster and costs lower.
3. Increase liquidity and support round-the-clock trading
4. Achieve global asset allocation
5. Reduce intermediate links and improve operational efficiency

This newly issued Hong Kong dollar digital currency fund primarily invests in Hong Kong dollar short-term deposits and high-quality money market instruments, and uses other money market instruments and funds as auxiliary investment assets. It adopts a custodial tokenization model, with a certain bank serving as the tokenization agent, digital platform operator, and token custodian.

It is worth noting that retail investors can only subscribe or redeem tokenized shares in the form of tokens through qualified distributors. The only disclosed qualified distributor is the only listed and compliant licensed cryptocurrency trading platform in Hong Kong. At the same time, this fund is issued only to investors in the Hong Kong region.

Compared to traditional funds, the redemption mechanism of tokenization funds is different:

When subscribing, investors purchase fund tokens through qualified distributors and pay with fiat currency. After receiving the application, the fund manager issues tokenized shares and instructs the blockchain platform to mint tokens, which are stored by the custodian in the distributor's blockchain wallet.

When redeeming, investors apply to the distributor to redeem tokens. After receiving the notice, the fund manager redeems the tokenized shares and destroys the corresponding tokens, while paying the redemption proceeds to the distributor, who then pays the proceeds to the investors.

As the first approved retail tokenization fund in the Asia-Pacific region, this marks a new stage in the application of Web 3.0 and blockchain technology, opening participation to the general public investors. Although the current investment targets are still low-risk money market funds, the focus is on promoting the innovative integration of RWA( real-world assets) with blockchain technology, emphasizing asset security and liquidity.

If this attempt is successful, more funds may join the blockchain tokenization ranks in the future, leading to more diversified investment strategies. For example, is it possible to achieve round-the-clock instant trading through digital currencies? Are tokenized funds expected to expand their investment scope and launch higher-yielding products in the future?

As the compliant blockchain currency system matures gradually, asset tokenization, with the advantages of on-chain transactions and global liquidity, may become a key driving force in reshaping the global asset management landscape.