What To Know:
- Hong Kong’s regulator says tokenized asset development is lagging due to weak industry participation, despite clear regulatory guidance issued last year.
- Elizabeth Wong notes that firms show interest but rarely present concrete models or real-use cases, widening the gap between policy ambition and market execution.
- The regulator warns that tokenization cannot progress without market-led proposals, stressing that operational readiness and genuine engagement are still missing.
Hong Kong’s push to advance tokenized finance is facing an unexpected bottleneck i.e., a lack of meaningful industry participation, as shared by Elizabeth Wong, Director at the Securities and Futures Commission (SFC), during a discussion at the Finternet 2025 Asia Digital Finance Summit on November 4.
Hong Kong: Crypto Tokenized Asset Progress Very Slow
Wong, who oversees intermediaries and leads the regulator’s fintech unit, said that despite issuing detailed guidance on tokenized products in 2023, the market has yet to produce substantial examples or validated use cases. “Progress has been very slow,” she noted, adding that the gap between regulatory readiness and actual market execution remains wide.
Her comments came during a moderated conversation with Rocky Tung of the Financial Services Development Council, who asked how Hong Kong’s digital asset approach has evolved and where the momentum appears to be stalling. Wong’s answer was blunt: the guidance is there, the licensing pathways are clear, and the regulatory expectations are not ambiguous. What is missing, critically, is constructive feedback and active experimentation from industry participants.
Since 2018, the SFC has taken a phased approach to supervising digital assets, expanding its scope from trading platforms to intermediaries, funds, and custody arrangements. Wong emphasized that the regulator has deliberately built a “safe and credible” framework and was initially cautious. The strategy worked for licensing trading platforms, but in the case of tokenized products, the response from firms has not kept pace.
“We set out the regulatory guardrails, clarified that securities laws apply to tokenized securities, and we provided guidance through multiple channels,” she said. The SFC also works closely with the Hong Kong Monetary Authority on Project Ensemble, which is exploring tokenized settlement and market infrastructure. “But when we ask the industry to tell us what they need to build viable models, the input is limited. And without that feedback, innovation becomes harder to support.”
Wong’s comments reflect a broader concern within the regulator: Hong Kong cannot build tokenized markets without market-led proposals. While the SFC has encouraged experimentation, it has seen few firms willing to take the lead or propose concrete product structures.
The result is a widening gap between policy ambition and commercial progress.
Wong also noted that Hong Kong’s initial approach, building a “closed-loop” digital asset market where licensed trading platforms anchor the entire ecosystem, was designed for safety. Over time, however, that insulated model limited global connectivity. Local liquidity became fragmented from the broader digital asset market, reducing depth and volume.
To address this, the SFC recently published new guidance allowing licensed platforms in Hong Kong to share order books with their overseas affiliates. Wong described this as a significant regulatory shift, and one that emerged only after long engagement with platform operators who needed to demonstrate they could meet the trading and market-misconduct safeguards required for such cross-border connectivity.
But tokenization presents a different challenge. While global liquidity-sharing can be implemented once systems and controls are proven, tokenization requires issuers, intermediaries, custodians, and infrastructure providers to coordinate on product design. That coordination has not materialized.
“We are still looking for real examples,” Wong said. She noted that many firms express interest in tokenization, but few submit concrete proposals or demonstrate operational readiness. Some do not fully implement the policies they submit during licensing, an issue the SFC has repeatedly confronted.
To support future development, Hong Kong has launched consultations on licensing for virtual asset dealers and custodians. Feedback has also suggested adding advisory and fund management activities to the framework. Wong believes a fully regulated chain, from product creation to distribution and safekeeping, will be essential for long-term growth.
Still, she underscored that the regulator cannot force innovation. The industry must step forward.
“We’re ready,” Wong said. “But for tokenization to take off, we need genuine participation. Without it, progress will stay slow.”
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