China Tightens Grip: Regulators Pressure Hong Kong Brokers to Halt RWA Tokenization Projects

Hong Kong's crypto ambitions face regulatory headwinds as mainland authorities intervene.

Behind the Scenes Pressure

Chinese regulators are quietly directing brokerage firms to suspend real-world asset tokenization initiatives in Hong Kong. The move signals Beijing's cautious approach toward blockchain-based financial innovation despite the territory's push to become a digital asset hub.

Strategic Pause or Permanent Halt?

Industry insiders report receiving 'guidance' to pause all RWA tokenization work indefinitely. The directive affects multiple firms exploring tokenized commodities, real estate, and other traditional assets—potentially cooling Hong Kong's hottest fintech trend.

Regulatory Whiplash Strikes Again

Just as institutions warmed to blockchain's potential for fractional ownership and liquidity, traditional oversight mechanisms reassert control. Another reminder that in finance, innovation moves faster than regulation—until it doesn't.

Beijing maintains restrictive stance

Since 2021, China has pursued a restrictive policy on crypto trading and mining, primarily out of concern for financial system stability. In contrast, RWA tokenization is expanding rapidly, particularly through Chinese firms in Hong Kong that transform traditional assets into digital tokens. The CSRC’s directive appears intended to ensure that such projects do not progress faster than regulation and risk controls allow.

The immediate impact was visible in the markets: shares of major Chinese brokers with exposure in Hong Kong dropped by 2% to more than 7%. Market observers view this pause as a correction phase to clear up regulatory uncertainty. Meanwhile, Hong Kong is working on legal frameworks for tokenization, such as in the bond market. Forecasts suggest that the global market for tokenized real-world assets could surpass USD 2 trillion by 2030. How long this pause will last - and how the affected firms will implement the instruction - remains unclear.

Another aspect is the geopolitical dimension: while Hong Kong seeks to establish itself as a leading hub for digital assets in Asia, the CSRC’s MOVE shows that Beijing intends to maintain the upper hand over critical financial innovations. Analysts see this as a balancing act between innovation and control - ensuring Hong Kong’s international competitiveness without clashing with the mainland’s restrictive policies.