Author: Wang Lele, head of OKLink Research Institute, and Jiang Zhaosheng, senior researcher at OKLink Research Institute
Trump recently announced the issuance of his personal meme coin $Trump on social media, which once again attracted the attention of global investors to the crypto market. After returning to the White House, Trump may usher in a new era of US crypto regulation and push more institutions to join the wave of crypto innovation. Kara Calvert, Coinbase's US policy director, also said recently, " Trump has signaled that the United States is back and we are ready to lead the industry. What this means to other countries is to be careful, otherwise you will not be able to keep up. "
The participation of traditional institutions determines the “ acceleration ” of RWA tokenization
Tokenization is moving from concept to implementation, and is called "the third revolution in asset management" by Boston Consulting Group, and is expected to achieve explosive growth in the next five years. OKG Research predicts that non-stablecoin tokenized assets will exceed US$30 billion in 2025.
As a global financial center, Hong Kong is also actively embracing the wave of RWA tokenization. The Chief Executive's Policy Address in 2024 proposed promoting RWA tokenization and the construction of a digital currency ecosystem, and the Hong Kong Monetary Authority also launched the "Digital Bond Funding Program" to encourage the capital market to adopt tokenization technology. These measures show that Hong Kong hopes to reshape its financial competitiveness through tokenization and take the initiative in future competition.
However, the main force driving global tokenization innovation still comes from the United States. Traditional American institutions represented by Wall Street are using tokenization to accelerate the on-chain movement of traditional financial assets and businesses while allowing traditional funds to flow to the chain through the Bitcoin spot ETF channel. Institutions such as BlackRock, Goldman Sachs, and JPMorgan Chase are setting off the first wave of tokenization and will radiate their influence around the world. BlackRock's U.S. debt tokenization fund BUIDL has a scale of more than US$630 million, and JPMorgan Chase is also leading the tokenization of traditional assets such as U.S. Treasury bonds and money funds through the Onyx platform.
In contrast, Hong Kong has not yet seen any institutions or projects with global influence in the field of tokenization. Although Hong Kong has been active in promoting tokenization policies, compared with the United States, where innovation is led by leading financial institutions, Hong Kong's traditional financial institutions have relatively low participation and remain cautious about the Web3 industry, more in a " wait-and-see " state . This has prevented Hong Kong from fully realizing its potential in tokenization innovation despite its rich financial resources.
The conservative attitude of traditional institutions in Hong Kong towards tokenization is mainly due to compliance requirements. Compliance is necessary, but it should not be an obstacle to innovation. The core of tokenization lies not only in technical implementation, but also in institutional participation. The participation of traditional institutions will largely determine the early prosperity of the tokenization market. Although the stock tokenization plan recently proposed by Coinbase in the United States is still in the strategic planning stage, once successful, it may be quickly replicated and even create a "Nasdaq on the chain", injecting huge increments into the tokenization market. This also shows that only when more resource-rich institutions actively participate can the tokenization market develop faster.
In the short term, when the existing model cannot be changed, Hong Kong should adopt a more open tokenization sandbox mechanism to attract more traditional institutions to participate and carry out cutting-edge practices with innovation and market potential. At the same time, in order to avoid the fragmentation of the sandbox, Hong Kong can include relevant explorations such as stablecoins and DLT in the sandbox for joint pilots; and encourage more institutions to freely explore tokenization applications according to their own endowments. Whether it is tokenized funds and stocks, or other assets, as long as they are willing and able, they can conduct small-scale pilots in the sandbox, summarize experiences in the exploration, and gradually enhance the willingness and ability of institutions to innovate in the field of tokenization.
Only when more institutions with resources and assets actively participate in tokenization innovation can Hong Kong take more initiative in the transformation and avoid being quickly left behind in the competition with the United States.
Only by focusing on standardized financial assets can the RWA market be expanded
In addition to stimulating market innovation, Hong Kong also needs to further clarify its development focus at the tokenized asset level. Global tokenization exploration is mainly focused on standardized financial assets. Although Hong Kong has previously explored the tokenization of funds and bonds, the most popular focus at present is on the tokenization of non-financial assets such as new energy and agricultural products. Although these explorations are conducive to the long-term development of the tokenized ecosystem, it is difficult to establish market advantages in the short term.
As OKG Research has previously pointed out, there will be a significant time difference in the tokenization process of different assets: Standardized financial assets with stable returns and considerable scale, such as bonds and funds, are the most suitable asset categories for tokenization at this stage, and the tokenization experience of these standardized assets will also lay the foundation for the tokenization of asset categories with smaller scale, less obvious benefits or more severe technical challenges. Therefore , Hong Kong should focus on the most suitable standardized financial assets for tokenization in the short term, give full play to the geographical and institutional advantages of Hong Kong as an international financial, trade and shipping center, focus on the tokenization applications in trade and cross-border related scenarios, and quickly expand the scale of Hong Kong's RWA tokenization market.
In addition, although technology is not the key to the success or failure of tokenization, an open technology system is more conducive to tokenization innovation . Some overseas institutions choose private chains due to regulation, but more financial and technology giants are embracing public chains. Public chains are significantly superior to other technology systems in terms of global liquidity and openness, and have become the preferred platform for more than 60% of tokenized bonds and funds. In terms of security, thanks to the development of data openness and on-chain analysis technology, asset tracking and review on public chains are becoming easier. In addition, most tokenized assets are managed off-chain, and the real risks are actually more concentrated off-chain, while the on-chain mainly ensures business compliance. Therefore, under the premise of compliance, Hong Kong should be more confident in exploring tokenization applications and innovations on public chains, and gradually make it the focus of tokenization innovation.
Finally, as a fusion product of two different financial systems, the ideal state of RWA tokenization is to accelerate the migration of real assets to the chain, but not to limit its value to the chain. In the end, it still needs to serve and feedback reality . Faced with the active actions of Wall Street institutions in the field of tokenization, Hong Kong has little time left. If Hong Kong can accelerate its embrace of innovation with the help of its institutional and market advantages, explore the balance with regulatory compliance while giving traditional institutions more room for innovation, and rely on the trillions of assets that the mainland can provide, Hong Kong will definitely have an absolute advantage in the field of tokenization and have a bright future. Boston Consulting Group estimates that the scale of Hong Kong's potential tokenized assets has reached 36 trillion Hong Kong dollars.
We look forward to Hong Kong accelerating in the RWA sector by 2025.
