Hong Kong RWA market changes: retail investors may be allowed to enter

April is hot, and various Web3 conferences are gathering in Hong Kong, the Pearl of the Orient. Among the vertical fields discussed by many big names, RWA has become a focus of attention.

RWA, or Real World Assets, refers to the use of blockchain to digitize physical assets with tangible value, allowing investors to participate in the real economy with unprecedented convenience. As an international financial center, Hong Kong actively embraces innovation and attempts to establish a new paradigm for real asset investment in the digital age in areas such as Web 3.0, virtual assets, and RWA tokenization, and has made remarkable progress.

Frank, Executive Director of OKX Hong Kong, admitted that the traditional financial ecosystem has a history of over 600 years. In the past 600 years, people have made the world more efficient through their understanding of the essence of traditional finance and scientific application. However, with the advancement of technological innovation, the development of RWA is clearly a trend, and people can use technology to further improve efficiency and further save related costs. Of course, some traditional financial companies are already very mature and do not necessarily need to add RWA-related businesses, but other companies are likely to increase their development space and competitiveness by laying out the RWA track.

In fact, Hong Kong's RWA market is undergoing a major change.

Hong Kong Securities Regulatory Commission's open policy helps attract funds

In January this year, GF Securities (Hong Kong) successfully issued the first short-term commercial paper (Commercial Paper) tokenized securities applicable to Hong Kong law, with technical support provided by ABT Tech, a locally incubated blockchain technology company. This is the first issuance of tokenized securities following the Hong Kong Securities Regulatory Commission’s important regulatory guidelines issued in November last year, marking a new milestone in the development of Hong Kong’s digital finance. This innovative case fully demonstrates Hong Kong’s forward-looking thinking and pragmatic action in promoting the development of Web 3.0, virtual assets and RWA tokenization.

RWA tokenization is only the first step in the digitization of financial assets, that is, putting assets on the chain; the issuance and circulation of tokens allow investors to purchase tangible physical assets through blockchain in the form of public ledgers, which can technically lower the entry threshold for investors, optimize the cost of asset flow, and open up a new path for revitalizing traditional assets and improving investment convenience in the future. The Hong Kong Securities and Futures Commission recently made it clear that security token issuance (STO) and RWA investment may be open to retail investors, which will undoubtedly attract more funds into the Hong Kong market.

The development of RWA and STO is expected to inject new growth momentum into Hong Kong's economy. On the one hand, related innovations can improve the liquidity of physical assets, allowing global investors to have more choices and flexibility when investing in Hong Kong's real estate and other fields; on the other hand, the application of blockchain technology can help improve operational efficiency, reduce transaction costs, simplify transaction processes, and make it possible for traditional financial services and products to be upgraded to highly innovative programmable finance. Although RWA and STO are still investments in the infrastructure stage, with the continuous improvement of the regulatory environment and the improvement of investor awareness, it is believed that they will attract more and more traditional financial institutions.

What opportunities are there in the RWA track?

Tokenized securities rely on the Ethereum blockchain public network ecosystem, and have many advantages such as transaction security, transparency, and efficiency. Investors can query and monitor token-related information at any time without being restricted by any institution. With the openness of Ethereum, investors can flexibly develop auxiliary tools and achieve multi-point integrated management; more importantly, the issuance of tokenized securities breaks the dependence on traditional intermediaries, greatly reduces the threshold for participation, expands the investor group, and opens up the possibility of designing personalized products.

In fact, the road to promoting RWA innovation is by no means smooth, which requires the concerted efforts of regulators, the industry and investors. However, it is gratifying that the Hong Kong regulatory authorities are open and supportive of RWA innovation. For example, the Securities and Futures Commission has made it clear that RWA investment is expected to be open to retail investors, which will undoubtedly attract more funds to flow in and give RWA innovation wings to take off. If Hong Kong wants to strive to become the source of global RWA innovation, it must further improve the top-level design, break through the innovation bottleneck, optimize the infrastructure, cultivate the market ecology, and lead the industry to a higher quality and more sustainable track.

Summarize

Standing at the turning point of the digital economy era, Hong Kong is embracing the RWA revolution with an open attitude and leading innovative development with pragmatic actions. Although the next generation of new finance has raised many challenges in terms of technology and compliance, the core issue to be solved is whether it can bring more liquidity to the traditional financial market in a safe and compliant environment.

Hong Kong has the potential to play an important role in the global adoption of RWA platforms and technologies. As one of the world's top three financial centers, Hong Kong has excellent connectivity, resources, talent, mature financial infrastructure and regulations, a large number of Web3 companies and ideas. At the same time, Hong Kong also has a mature investor base, which provides a favorable and solid environment for the adoption of RWA. More importantly, Hong Kong is a gateway to Asia and other regions. Its strategic location and strong international connections may help the RWA platform enter the Asian market on a large scale.

Looking ahead, Hong Kong has a lot to offer in terms of STO and RWA innovation. Thanks to the advanced and sound regulatory framework, Hong Kong has created a good environment for the development of the Web3 industry. The key next step is to continue to innovate, expand investment channels, and improve infrastructure construction under the premise of compliance.