Hong Kong is set to issue guidelines on tokenization of authorized investment products in the near term. Christina Choi, the Executive Director of Investment Products at Hong Kong’s Securities and Futures Commission (SFC), shared this information during a speech, media reports said.
“Our current thinking is that in principle, primary trading of tokenized SFC-authorized products would be the most suitable to be permitted initially, given the early stage of development of the virtual asset services platforms (VATPs) regime in Hong Kong,” she added.
Choi stated that the SFC is actively working on this guidance. However, she acknowledged that tokenization would introduce new risks and raise legal, regulatory, and supervisory challenges associated with the use of this emerging technology.
“Secondary trading of tokenized SFC-authorized products on VATPs would require more caution and careful consideration.”
Choi explained that secondary trading could amplify some of the risks, which might be more manageable in primary trading but could become more complex in a 24/7 trading environment.
“Secondary trading would effectively transform a tokenized product into an ‘exchange traded product,'” she noted. “In this scenario, the VATP would function much like a traditional stock exchange, facilitating secondary trading of securities and other products offered to the Hong Kong public, with the primary distinction being that these assets are represented as tokens rather than conventional stocks.”
In June, Hong Kong officially initiated its crypto licensing regime for VATPs, enabling licensed exchanges to offer retail trading services.
