FSDC: Focus on developing the tokenization of physical assets in the next 2-5 years

# Charting Hong Kong's Course as a Global Capital Hub in the Digital Era

**Written by** : Liang Yu

**Edited by** : Zhao Yidan

Peter Wong, Chairman of the Financial Services Development Council (FSDC) of Hong Kong, held a thick concept paper and announced a more ambitious goal than being an "international financial center" — to develop Hong Kong into a "globally influential capital hub in Asia" within five to ten years. The core driving force behind this bold blueprint is explicitly identified as "tokenization".

On December 13th, the FSDC released a concept report titled *Hong Kong’s Path to Leading the Capital Market: From Super-Connector to a Global Capital Hub in the Digital Age*. The report proposes a strategic framework centered around the "Four Is", with various initiatives mapped out on a clear timeline.

Notably, the report outlines a distinct roadmap for the development of tokenized assets. In the medium term (2 - 5 years), the focus will be on developing tools such as tokenized physical assets. In the long term (5 - 10 years), the vision is to gradually enhance capabilities in supporting tokenized issuance and post - transaction operations.

Approximately one month prior to the report's release, Hong Kong achieved a globally acclaimed milestone: the Hong Kong Special Administrative Region Government successfully priced digital green bonds equivalent to around HK$10 billion, marking the world's largest - scale issuance of digital bonds to date.

This issuance not only set a new record in scale but also made a technological breakthrough by introducing tokenized central bank currencies in Hong Kong dollars and Renminbi for settlement for the first time.

This achievement and the blueprint mutually corroborate, revealing the core logic behind Hong Kong's financial strategic transformation. Hong Kong is striving to move beyond its traditional role as a capital transit channel. By tokenizing assets and building a new generation of digital financial infrastructure, it aims to become one of the architects of the rules governing global capital in the future.

## I. Strategic Blueprint: Beyond the "Super-Connector", Towards a "Global Capital Hub"

Hong Kong has set new expectations for its financial role. According to the FSDC's concept report, the goal is to evolve into a "globally influential capital hub in Asia" that supports multiple assets and currencies within five to ten years.

This positioning goes beyond Hong Kong's traditional identities as an "international financial center" and the "super-connector" linking the Chinese mainland and the rest of the world. Peter Wong elaborated on the necessity of this upgrade. In the new era characterized by the rapid digitalization of global markets and the real - time cross - border flow of capital, the leading position of a financial center depends not only on liquidity and the number of listings but also on its ability to serve as an efficient "capital hub" connecting global issuers, investors, and financial instruments.

Hong Kong's ambition is underpinned by its solid existing foundations: an asset management scale exceeding HK$35 trillion, a mature common law system, and a unique connectivity mechanism.

The strategic framework proposed in the report revolves around the "Four Is": attracting diverse "Issuers", expanding the "Investor" base, strengthening the "Intermediary" ecosystem, and enriching "Instruments".

Among these, the plan for "Instruments" is particularly noteworthy, with clear priorities on developing tokenized assets, sustainable financial products, and alternative investments.

To turn this vision into reality, the report lays out a clear three - phase transformation timeline, embodying Hong Kong's strategic approach of "progressive aggression".

## II. Transformation Path: A Clear Timeline for Tokenization

Hong Kong's transformation will not happen overnight; instead, it follows a clear roadmap divided into three phases: short - term, medium - term, and long - term.

The short - term tasks, spanning 1 - 2 years, focus on optimizing the market environment. The core measures include refining listing rules to attract new - economy enterprises and inject vitality into the capital market. Recent observations from Li Yiyue, Executive Director of the FSDC, during his visits to the Middle East, Southeast Asia, and Central Asia support this direction. He noted that many local enterprises are willing to go public but face dilemmas in choosing a listing venue. Amid complex geopolitical dynamics, Hong Kong's importance as a reliable option for secondary listing or dual primary listing has become increasingly prominent.

The medium - term phase, lasting 2 - 5 years, is centered on expansion and deepening. Key efforts will involve extending the existing connectivity mechanism to broader areas such as derivatives and bulk commodities, while initiating the development of tools like tokenized physical assets. This phase signifies a shift from linking traditional financial products to exploring and embracing new types of digital financial assets.

The long - term objective, covering 5 - 10 years, entails a fundamental overhaul of infrastructure. The focus is on constructing a new generation of digital financial infrastructure to support asset tokenization and the multi - currency fixed - income market, ultimately consolidating Hong Kong's status as a center for capital allocation and risk management. Specifically, it involves gradually enhancing capabilities in supporting tokenized issuance and post - transaction operations, and promoting the coordination and unification of data and compliance standards on a larger scale.

It is evident from this timeline that tokenization is not an isolated product innovation but a core thread running through medium - term product exploration and long - term infrastructure reconstruction.

## III. Why Tokenization? Hong Kong's Strategic Rationale

Elevating tokenization to the core of its financial strategy for the next five to ten years stems from Hong Kong's profound and multi - dimensional strategic considerations. This move is far more than just keeping up with technological trends. The digital Hong Kong dollar is primarily targeted at financial institutions, serving large - value payments, cross - border trade settlements, and financial transactions. Its greatest advantage lies in being issued by the central bank, eliminating credit risks, making it particularly suitable as a settlement tool for large - scale and critical financial transactions.

Beneath the digital Hong Kong dollar lie tokenized deposits and regulated stablecoins. Through project sandboxes such as "Ensemble", the Hong Kong Monetary Authority (HKMA) has actively collaborated with the industry to explore the use of tokenized deposits for digital asset transaction settlements.

Eddie Yue, Chief Executive of the HKMA, envisions establishing a sound digital currency framework. This framework will promote the complementary coexistence of various forms of tokenized currencies, including the digital Hong Kong dollar, tokenized deposits, and regulated stablecoins, collectively facilitating financial innovation.

In terms of data, Hong Kong is committed to breaking down "data silos" in the financial system. The HKMA compares data to scattered islands, and the new - generation data infrastructure serves as the "digital bridges" connecting these islands. A key achievement in this regard is the Commercial Data Interchange (CDI).

Since its launch in 2022, the CDI has acted as a secure bridge linking banks and multiple data providers. By September 2025, it had facilitated over 71,000 loan applications, with the total approved credit amount exceeding HK$58.1 billion. From small and medium - sized enterprise loans to personal financial services, the secure and efficient flow of data has effectively reduced the threshold and costs of financial services.

This "currency + data" digital infrastructure perfectly aligns with the tokenized asset strategy. Tokenized assets require an efficient and trusted payment and settlement network (supported by the digital currency ecosystem) as well as reliable identity and asset information verification (backed by data bridges). Together, they form the indispensable underlying operating system for Hong Kong to become a global capital hub in the future.

## VI. A Sober Assessment: Challenges and Profound Significance Behind the Vision

While the blueprint is inspiring, the path ahead is fraught with challenges. As Hong Kong advances towards becoming a global capital hub, especially with tokenization as the core of its transformation strategy, it faces multiple internal and external challenges alongside its unique advantages, which demand a calm assessment.

The primary challenge lies in the complexity of coordination. Tokenized finance spans multiple regulatory areas, involving authorities such as the HKMA, the Securities and Futures Commission (SFC), and the Financial Services and the Treasury Bureau (FSTB). Establishing a clear, unified, and efficient regulatory coordination mechanism will be a major test. When it comes to cross - border tokenized assets, the challenges will intensify, requiring communication and collaboration with regulatory bodies across different jurisdictions.

Technological risks and the immaturity of the ecosystem pose another practical constraint. Distributed ledger technology is still evolving, and its security, scalability, and interoperability need to be tested through large - scale applications. Meanwhile, it will take time to foster Hong Kong's local supporting industries, such as the blockchain developer ecosystem, professional legal services, and auditing services, to keep pace with the rapid pace of financial innovation.

Fierce international competition cannot be ignored. Global financial centers like Singapore, London, and Dubai are actively deploying layouts in digital assets and tokenization. For instance, the World Gold Council plans to launch digital tokens backed by physical gold in London. To maintain a leading position in the competition, Hong Kong must sustain innovation and fully leverage its unique strengths, including the common law system, free capital flow, and its proximity to the vast Chinese mainland market.

Despite these challenges, Hong Kong's initiative holds profound strategic significance. It signals that the competition in the global financial landscape is shifting from a race for scale and capital flow to a contest over rules and standards. No longer content with being merely a channel for capital movement, Hong Kong aims to take the lead in practice and participate in formulating the technical specifications and governance rules for the next generation of financial infrastructure.

From a broader perspective, under the principle of "One Country, Two Systems", this initiative represents a proactive and forward - looking layout by Hong Kong to consolidate its status as an international financial center, serve the country's financial opening - up, and promote the internationalization of the Renminbi. By establishing itself as a trusted and efficient global capital hub in the digital age, Hong Kong can play a more crucial and innovative role than ever before in bridging the Chinese mainland and the rest of the world.

Christopher Hui, Secretary for Financial Services and the Treasury of Hong Kong, stated after the latest digital bond issuance that Hong Kong's unique advantages have positioned it at the forefront of advancing traditional finance into the era of digital assets.

Not long ago, Hong Kong topped the financial technology category in the global international financial center rankings. As global capital turns its attention to the digital tokens on the blockchain, Hong Kong has already laid out its navigation chart. It is striving to convert institutional trust into technical standards and carve out a new position as a "hub" on the global digital finance map.

### Sources

- *Hong Kong’s Path to Leading the Capital Market: From Super-Connector to a Global Capital Hub in the Digital Age*

- *FSDC: Promote Physical Asset Tokenization in 2 - 5 Years and Improve Tokenized Issuance and Trading Systems in 5 - 10 Years*

### Disclaimer

The market is inherently risky, and investment decisions should be made with caution. This article does not constitute personal investment advice and fails to take into account individual investors' specific investment objectives, financial situations, or special needs. Readers are advised to evaluate whether any opinions, views, or conclusions contained herein are appropriate for their personal circumstances. Investors shall bear full responsibility for any investments made based on the information provided in this article.