How Are Real-World Assets Tokenized in Hong Kong?
The RWA market has experienced significant growth, expanding from approximately $1.5 billion in August 2023 to $38.86 billion by September 13, 2026. As the sector matures, the focus is shifting from simple issuance to the practical mechanics of how tokenized products are structured, sold, and repaid. Tiger Research highlights a 'dual-engine' model, exemplified by Finloop, which utilizes an offshore British Virgin Islands (BVI) special purpose vehicle (SPV) to hold underlying assets while leveraging Hong Kong’s regulatory framework for distribution. In this structure, investors purchase tokenized notes issued by the SPV rather than the underlying assets directly, necessitating robust legal contracts to ensure cash flows from assets reach the SPV in time for investor payouts. Hong Kong serves as a critical hub due to its established securities framework, SFC licensing, and VASP regulations, which provide clarity for institutional participants. However, the report emphasizes that successful issuance does not guarantee repayment, as liquidity risks and collection path complexities remain significant hurdles. Ultimately, the sustainability of the RWA market depends on creating reliable, scalable structures that can consistently bridge the gap between diverse global assets and international professional investors. This analysis underscores that while tokenization technology is advancing, the legal and operational plumbing remains the most vital component for long-term market viability.
