China’s Securities Regulator Clamps Down: Brokerages Ordered to Halt Real-World Asset Tokenization in Hong Kong
Hong Kong's crypto ambitions hit regulatory roadblock as mainland authorities tighten reins.
THE CRACKDOWN BEGINS
Chinese securities watchdogs just dropped the hammer—ordering select brokerages to immediately suspend all real-world asset tokenization operations in Hong Kong. The move signals Beijing's growing unease with digital asset expansion, even in specially administered regions.
REGULATORY WHIPLASH
Hong Kong positioned itself as Asia's crypto hub, but mainland regulators clearly have different plans. They're pulling emergency brakes on RWA tokenization just as markets warmed to the concept. Traditional finance giants might cheer—they've never liked these blockchain upstarts cutting into their territory anyway.
BETTING ON BLOCKCHAIN BACKLASH
This isn't just paperwork—it's a power move. By targeting Hong Kong's tokenization efforts, China demonstrates who really controls the financial strings. The timing's brutal too, right when institutional interest peaks. Typical finance play—innovate first, regulate later, panic never.
Market observers now watch whether this chilling effect spreads beyond brokerages. One thing's clear: when China's regulators talk, even Hong Kong's freewheeling markets listen.
Hong Kong is trying to become the hub for DeFi
The warning comes as Hong Kong has sought to establish itself as a hub for digital finance over the past year. Authorities there have encouraged companies to set up VIRTUAL asset trading, advisory, and management services.
China, in contrast, has kept a wary eye on cryptocurrencies and related innovations. Once the world’s leading centre for Bitcoin mining and trading, the mainland outlawed crypto transactions and mining in 2021, citing risks to financial stability.
Last month, Chinese regulators reportedly told major domestic brokers to stop publishing research favourable to stablecoins, a measure aimed at cooling investor interest in those tokens. On the other hand, Cryptopolitan reported earlier that the Hong Kong government has urged the setting up of an RWA regime.
Meanwhile, Hong Kong’s Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority said in June they were conducting a legal review of RWA tokenization, drawing lessons from international markets.
The global RWA sector is currently valued at about $29 billion, according to data provider RWA.xyz. Analysts at China Merchants Securities said last month that the figure could rise above $2 trillion by 2030.
It is not yet clear how long the CSRC’s informal guidance will remain in place. The individuals with knowledge of the matter declined to be identified in the exclusive report by Reuters as they were not authorised to speak publicly.
DeFi firms are readily testing virtual assets in Hong Kong
Brokerages and other firms have recently tested new products in Hong Kong’s friendlier regulatory climate. In June, the Hong Kong arm of GF Securities introduced “GF tokens,” a series of yield-linked products supported by the value of the U.S. dollar, Hong Kong dollar, and offshore renminbi, according to its partner HashKey Chain.
China Merchant Bank International (CMBI), a unit of China Merchant Bank, announced last month that it helped Shenzhen Futian Investment raise 500 million yuan ($70.29 million) through the issuance of a digital bond tied to real-world assets. GF Securities and CMBI did not immediately reply to requests for comment about whether they had been contacted by regulators regarding their tokenization work.
Beyond brokerages, Chinese developer Seazen Group revealed in August that it was setting up a Hong Kong institute to promote RWA tokenization.
Hong Kong’s recent introduction of a stablecoin regulatory framework has further fuelled investor interest. Earlier this month, the HKMA reported that 77 companies had shown interest in applying for licenses by August 31.
Investors have already started reacting. Shares in Chinese firms with digital asset goals have surged after announcements tied to Hong Kong approvals.
A state-owned brokerage, Guotai Junan International’s stock went up by more than 400% earlier this year after it disclosed that it had secured permission to provide crypto trading services in Hong Kong.
Similarly, Fosun International’s shares spiked as much as 28% on August 12. The spike came after reports surfaced that chairman Guo Guangchang and the firm’s stablecoin team had met senior Hong Kong officials.
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