A big step for Hong Kong Web3.0: Huaxia launches its first tokenized fund for retail investors

Source: Lang Guangzhao, Zero One Think Tank

On February 13, 2025, China Asset Management (Hong Kong) announced that its "China Asset Management Hong Kong Dollar Digital Currency Fund" has been approved by the Hong Kong Securities and Futures Commission (SFC) and is expected to be officially listed at the end of February.

The fund is the first tokenized fund for retail investors in the Asia-Pacific region, providing investors with an innovative investment tool to obtain Hong Kong dollar currency fund returns through blockchain tools.  

In recent years, Hong Kong has stepped up its efforts in the virtual asset market. In 2022, the Hong Kong Financial Secretary issued the "Policy Declaration on the Development of Virtual Assets in Hong Kong", stating that "from the perspective of financial innovation, tokenizing different types of products will surely bring greater opportunities."

After that, the Hong Kong Securities Regulatory Commission issued two circulars, namely the "Circular on Intermediaries Engaged in Tokenized Securities-Related Activities" and its appendix and the "Circular on Tokenized Securities Regulatory Authorized Investment Products", which clarified the Hong Kong Securities Regulatory Commission's considerations and regulatory measures on tokenized securities, including clarification and relaxation of some of the original policies.

Huaxia Hong Kong Dollar Digital Currency Fund is the first retail fund approved for launch after the Hong Kong Securities Regulatory Commission issued the "Circular on Tokenized Securities Regulatory Authorized Investment Products" in November 2023.

Huaxia Fund (Hong Kong) said that in the face of investors' growing demand for innovative investment products, this fund aims to provide investors with more abundant on-chain investment options by integrating blockchain technology, and achieve transparent and secure settlement on a scalable public permissioned blockchain, thereby bringing investors a diversified investment experience.

In the global market, the exploration of tokenized funds has been fruitful.

Franklin Templeton launched the Franklin OnChain U.S. Government Money Fund (FOBXX) in 2021. The fund is the first tokenized fund in the United States approved by the SEC to use Stellar blockchain technology to process transactions and record ownership.

According to recent reports, Franklin Templeton will launch FOBXX on Solana, becoming the third largest tokenized money market fund. The fund has been launched on Ethereum, Coinbase Base, Aptos and Avalanche, using the Stellar network as the main blockchain. FOBXX has a market value of US$594 million.

On October 2, 2023, UBS Asset Management announced the launch of a tokenized fund pilot project. In November 2024, UBS launched uMINT, an Ethereum-based tokenized money market fund in Singapore, to provide cash management services to institutional investors.  

In March 2024, Blackrock and tokenization platform Securitize launched the institutional-level tokenized fund BUIDL. The fund is based on Ethereum and supports real-time on-chain transfers and USDC redemptions. The scale of management exceeded US$500 million in 4 months, attracting the participation of institutions such as Ondo Finance.

Chinese institutions have also explored tokenized funds for a long time.

It is reported that Harvest International cooperated with Meta Lab HK to tokenize its fixed-income fund products, and completed the filing with Hong Kong regulators in November 2023, and finally successfully issued Hong Kong's first tokenized fund on December 28, 2023. This is the first fixed-income tokenized fund launched by a Chinese financial institution in Hong Kong, but unlike China Asset Management, Harvest International's fund is mainly aimed at professional investors, and the product investment target is high-rated US bonds.

Tokenized funds are part of the entire RWA (real-world asset tokenization) market. RWA has developed rapidly in recent years and will begin to explode in 2024, with a market size of more than 14 billion US dollars. However, in the eyes of many industry insiders and researchers, 2024 is just an appetizer, and 2025 is the real first year of RWA explosion.

Before this, internationally renowned institutions such as Citibank, McKinsey, and BCG have made predictions on the potential scale of RWA. The minimum prediction is that by 2030, there will be 4 trillion US dollars, and the maximum is more than 30 trillion US dollars. For 2025, the investment institution Bitwise predicts that with the accelerated entry of Wall Street institutions, the RWA market size is expected to reach 50 billion US dollars, and it is likely to grow exponentially from then on.

Regarding the approval of the China Asset Management Hong Kong Dollar Digital Currency Fund, Gan Tian, ​​CEO of China Asset Management (Hong Kong), said: "This milestone event is a key step in our strategy towards Web 3.0."

He believes that tokenized funds can bring revolutionary advantages to investors, including blockchain-based ownership issuance and transparent settlement. Tokenized securities are expected to reshape the global capital market landscape, and the launch of the Huaxia Hong Kong Dollar Digital Currency Fund is a great example of how digital technology can be used to make traditional financial products accessible.

Standard Chartered Bank serves as the tokenization agent, digital platform operator and token custodian of the product, while also providing traditional fund management and trust services. The fund will be tokenized through Libeara, a tokenization platform under SC Ventures.    

Standard Chartered Hong Kong and Greater China and North Asia Chief Executive Officer Huen Wai-yee said: "Digital assets are bringing fundamental changes to the ecosystem of the financial market."