Tokenized funds are no longer limited to subscription and redemption. Hong Kong is bringing traditional public funds into round-the-clock trading scenarios, filling a long-missing piece in the digital asset market.
On October 26, the Hong Kong Securities and Futures Commission (SFC) approved the first batch of tokenized funds for public offering to be traded on licensed virtual asset trading platforms in the secondary market. Two tokenized money market funds under China Asset Management (Hong Kong) — the HKD Fund and the USD Fund — officially began offering 24/7 trading from that day.
This is the world’s first time that tokenized funds available for public offering have been approved for secondary market trading on regulated virtual asset trading platforms. Investors can buy and sell the relevant fund tokens on licensed platforms, instead of only adjusting their positions through traditional fund subscription and redemption channels.
From subscription and redemption to secondary trading: what’s changed?
Previously, the main advantage of tokenized funds was recording and managing fund shares in the form of blockchain tokens, but investors’ exit methods still relied mainly on the fund’s traditional subscription and redemption arrangements.
Secondary market trading changes this. Investors can buy and sell fund tokens with other market participants on the platform, and trading hours are no longer strictly limited by traditional financial market opening times.
The two approved products are both money market funds, denominated in HKD and USD respectively. These products can be traded around-the-clock on licensed virtual asset trading platforms, providing a more flexible way for investors to adjust their positions.
However, it is important to note that 24/7 open trading does not mean that trades can always be executed at net asset value. Trading prices may still be affected by supply and demand, liquidity, and the opening hours of underlying asset markets.
Why is Hong Kong taking this step?
In April this year, the Hong Kong SFC released a regulatory framework for the secondary market trading of tokenized authorized investment products, specifying requirements for trading arrangements, pricing fairness, liquidity provision, information disclosure, and investor protection on relevant platforms.
The official approval of the first batch of products this October means that this regulatory framework has moved into the stage of practical operation.
The significance is not just the addition of two tradable products, but the attempt to link traditional financial products with digital asset trading infrastructure. Traditional funds manage the underlying assets, the blockchain records tokenized units, licensed platforms provide trading channels, and the regulatory framework manages trading order and risk control.
The Hong Kong SFC stated it will closely monitor related trading activities and, based on market development and operational experience, consider expanding the range of products in due course.
The next step for tokenized finance: more than just issuing new assets
Over the past year, the development of tokenized funds has focused mainly on product issuance, growth in assets under management, and blockchain technology application. However, if investors still lack convenient trading channels after holding tokenized assets, the actual utility will be limited.
Secondary market trading offers a new direction: allowing tokenized assets not only to be issued and held, but also to circulate continuously in a compliant market environment.
There are still several issues to be tested in the next stage, including whether round-the-clock trading can generate sufficient market depth, how prices remain reasonable during non-traditional trading hours, and whether investors can balance trading convenience with underlying asset liquidity.
The key step Hong Kong has taken is moving tokenized funds from "on-chain assets" to "on-chain trading." If subsequent products continue to expand and trading liquidity matures, tokenization may have the opportunity to evolve from merely an asset issuance method to financial infrastructure connecting traditional asset management and digital asset markets.
