China Halts RWA Tokenization Efforts in Hong Kong Amid Regulatory Concerns

China's securities regulator has instructed select brokerages to suspend real-world asset (RWA) tokenization activities in Hong Kong, signaling heightened scrutiny over digital asset ventures. At least two firms received directives to cease offshore RWA operations, reinforcing Beijing's cautious stance toward crypto-related innovations.

The move reflects deepening unease over Hong Kong's emergence as a digital asset hub, despite its separate financial system under the "One Country, Two Systems" framework. This intervention echoes China's 2021 cryptocurrency ban, which targeted mining and trading to safeguard financial stability.

Hong Kong had recently seen a surge in RWA launches by Chinese entities, including brokerages seeking to capitalize on the territory's crypto-friendly policies. The abrupt regulatory brake underscores the persistent tension between innovation and risk containment in China's approach to blockchain technologies.