In recent years, Real World Asset (RWA) tokenization, as an innovative model combining blockchain technology with traditional finance, has attracted widespread attention from global financial markets. As an Asian financial center, Hong Kong is actively exploring the RWA track, attempting to gain a first-mover advantage through pilot projects such as tokenized green bonds. However, despite Hong Kong's initial steps in the RWA field, its development path is far from smooth. Currently, Hong Kong's RWA experiments face three major challenges, and without restructuring its approach, it may struggle to become an asset hub for the Asia-Pacific region.
License Dividends Not Realized, Traffic Sparse
The Hong Kong Securities and Futures Commission (SFC) implemented the Virtual Asset Trading Platform (VATP) licensing system in June 2023, aiming to regulate the virtual asset market and attract global capital. By June 2025, Hong Kong had issued formal licenses to 10 exchanges, including HashKey Exchange, OSL, and HKVAX, with 8 more in the application queue. However, the license dividends have not been realized as expected. Although the recent media confrontation between HashKey and OSL brought the Hong Kong virtual asset ecosystem into the spotlight, the market lacks highlights. Among the 10 licensed exchanges, only a few have generated significant traffic and depth, with low secondary market trading activity, creating an awkward situation of "having licenses without a market".
The core reason for this dilemma is that Hong Kong's virtual asset market has not yet formed sufficient market depth and user base. While the licensing system provides compliance guarantees, the lack of a diverse asset pool and high-liquidity trading environment makes it difficult to attract institutional and retail investors. If license dividends cannot be converted into actual traffic, the attractiveness of Hong Kong's RWA ecosystem will be significantly diminished.
RWA Tokenization Stagnates
Hong Kong's exploration of RWA tokenization was once full of hope, with three pilot projects serving as landmark attempts. The first was the world's first tokenized green bond issued by the Hong Kong Monetary Authority (HKMA) in February 2023, worth 800 million Hong Kong dollars. The second was a 750 million Hong Kong dollar green bond led by HSBC in 2024, issued in four currencies. The third was a fixed-income product experiment in the "Project Ensemble" sandbox. However, after completing these three non-standard corporate bond issuances, Hong Kong's RWA tokenization process came to a halt.
Market expectations for RWA were pushed to their peak, but reality proved disappointing. Secondary market liquidity is severely insufficient, with tokenized assets barely circulating, and additional issuance plans have stalled. The reason lies in Hong Kong's RWA experiments being too focused on the linear "bond issuance = financing" logic, overlooking the importance of secondary market liquidity and market education. Moreover, the asset side is too narrow, limited to new energy bonds and failing to cover diverse cash flow assets like logistics, precious metals, and AI computing power. The funding side costs are high, with dollar financing costs exceeding 10% and project startup requiring $30 million, making it difficult for small and medium-sized enterprises to participate. These factors collectively impede the continued advancement of RWA tokenization pilots.
Licensed Platforms Struggle to Survive
Hong Kong's licensed virtual asset exchanges, which should be a crucial pillar of the RWA ecosystem, currently face survival challenges. Most platforms can barely maintain operations through over-the-counter (OTC) business due to a lack of core trading volume, with minimal revenue. A business model primarily based on OTC cannot support the platform's long-term development or provide sufficient liquidity for RWA tokenization.
High funding costs further exacerbate the platforms' difficulties. Currently, Hong Kong RWA projects generally face dollar financing costs exceeding 10%, with project startup funds around $30 million, far beyond the capacity of small and medium-sized enterprises. This high threshold not only limits asset diversity but also significantly reduces funding side participation. If licensed platforms cannot overcome their survival challenges, the sustainable development of Hong Kong's RWA ecosystem will be impossible.
Hong Kong RWA's Way Forward
Facing these three major challenges, Hong Kong RWA must reconstruct its development path to secure a place in global competition. First, it needs to break the linear "bond issuance = financing" mindset, expand the asset side to a diverse pool including logistics, precious metals, and agricultural assets, and lower funding costs by establishing offshore RWA mother funds and introducing HKD stablecoins to reduce financing thresholds. Second, build a multi-layered market structure: packaging mainland assets, Hong Kong primary issuance, secondary liquidity in Singapore or Dubai, and opening retail traffic through on-chain DeFi to form a cross-border positive cycle of capital and assets. Additionally, strengthening infrastructure is crucial, with Hong Kong needing to develop Layer 2 public chains, HKD stablecoins, and a compliant custody system to create a 7x24 settlement network.
Conclusion
Hong Kong's RWA experiment has not failed, but the current three challenges—unrealized license dividends, stagnant RWA tokenization, and struggling licensed platforms—indicate that the linear approach has reached a bottleneck. Only by restructuring the path, returning to infrastructure development, deepening the institutional market, and amplifying offshore advantages can Hong Kong transform from a "follower" to an "Asia-Pacific on-chain asset hub" and truly expand the RWA narrative.
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