The first retail tokenization fund in the Asia-Pacific region has been established in Hong Kong

On February 13, 2025, a fund company announced that its Hong Kong dollar digital currency fund was approved by the Hong Kong Securities and Futures Commission, making it the first tokenized fund in the Asia-Pacific region aimed at retail investors. The fund was officially listed on February 28, marking an important breakthrough in the tokenization of assets from institutional exclusivity to the mass market.

Tokenization funds convert fund shares into digital tokens by "on-chain" technology, with ownership of the fund represented by these tokens. Each token represents a unit or share of the fund. Compared to traditional funds, tokenization funds have numerous innovations in ownership attribution, information transparency, and trading models.

This Hong Kong dollar digital currency fund primarily invests in Hong Kong dollar short-term deposits and high-quality money market instruments, and offers three share classes: Hong Kong dollar, US dollar, and Renminbi. The fund adopts a custodial tokenization model, with a bank acting as the tokenization agent, digital platform operator, and token custodian.

Retail investors can only subscribe to or redeem tokenized shares in the form of tokens through qualified distributors. Currently, there is only one publicly available qualified distributor, which is a licensed cryptocurrency trading platform compliant in Hong Kong. The fund is only issued to investors in the Hong Kong region.

During the subscription, investors subscribe to tokens through distributors and pay with fiat currency. The distributor notifies the fund manager, who issues tokenized shares and instructs the platform to mint tokens. Upon redemption, investors redeem tokens from the distributor, who informs the fund manager, who then redeems shares and destroys tokens, paying out the redemption proceeds.

The launch of this tokenization fund marks a new stage in the application of Web 3.0 technology, providing opportunities for retail investors to participate. Although currently dominated by low-risk money market funds, more funds may adopt blockchain tokenization in the future and introduce more diversified investment strategies.

With the gradual maturation of the compliant blockchain currency system, asset tokenization, leveraging on-chain transactions and global liquidity advantages, may become a significant driving force in reshaping the global asset management landscape.