China Orders Brokers to Halt Real-World Asset Business in Hong Kong

In a new development, China instructed some domestic brokerages to halt their real-world asset (RWA) activities in Hong Kong. The move underscores a widening policy gap between the mainland and Hong Kong.

China Moves to Cool Hong Kong’s RWA Momentum

According to Reuters, the China Securities Regulatory Commission (CSRC) has issued informal guidance to at least two leading brokerages. They advised them to suspend their tokenization businesses in Hong Kong. The directive reflects Beijing’s concern over the growth of offshore digital asset markets and aims to tighten risk management around RWAs.

RWA tokenization typically involves converting traditional assets such as equities, bonds, funds, or real estate into blockchain-based tokens that can be traded digitally. Over the past year, several Chinese firms have tapped Hong Kong to launch such offerings.

Since banning cryptocurrency trading and mining in 2021, China has consistently sought to minimize risks tied to digital assets. Just last month, regulators reportedly instructed major brokers to cease publishing research that supports stablecoins.

By contrast, Hong Kong has been taking an opposite path. Earlier this year, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) began a review of RWA tokenization. This drew in international frameworks to position the city as Asia’s leading hub for virtual assets.

RWA Growing Billion Dollar Market

According to data from RWA.xyz, the market is already valued at $29 billion and is projected to surpass $2 trillion by 2030. For Chinese brokerages seeking to diversify revenue streams, the business offers a rare growth channel.

Some had already made big strides. GF Securities’ Hong Kong unit launched “GF Tokens” earlier this year, backed by multiple currencies including the U.S. dollar, Hong Kong dollar, and offshore renminbi. China Merchants Bank International recently helped Shenzhen Futian Investment raise 500 million yuan ($70 million) through an RWA-based digital bond.

In August, one of China’s top supply chain fintech firms, Linklogis, confirmed its partnership with the XRP Ledger to boost its global digital supply chain finance platform.

It remains unclear whether these firms have been directly affected by the CSRC’s latest warning. Reuters shared that spokespersons for both companies declined to comment.

Despite Beijing’s caution, Hong Kong has seen a wave of crypto enthusiasm. The city’s new stablecoin framework has drawn interest from 77 firms as of late August. Local brokerages have also enjoyed rallies in their share prices following announcements tied to digital asset initiatives.

State-owned Guotai Junan International saw its stock jump more than 400% after it secured approval to offer crypto trading services in June. Property firms are also getting involved. Seazen Group announced plans to establish an institute in Hong Kong focused on RWA tokenization.

The CSRC’s guidance highlights the uneasy balance between China’s strict regulatory stance and Hong Kong’s ambition to lead in digital finance.