November 03, 2025
By Eunice Xu and Joe Pan
If the Hong Kong 2024 Policy Address cracked open the door for real-world assets (RWA), the September 2025 address calling for the development of assets—including gold—may well be the starting gun, launching Hong Kong into a new digital “gold rush” of tokenized assets of all kinds. Yet, myths and confusion about RWAs linger. This article unpacks some of the common myths, particularly among Mainland Chinese asset owners and investors.
Most Common Myths and Hypes:
- There is a regulatory loophole for Mainland Chinese investors to access RWAs and stablecoin projects in Hong Kong
- Tokenization automatically enhances asset value, liquidity, or accessibility.
- Every type of asset can be tokenized in Hong Kong
- All RWA projects require stablecoins for tokenization or settlement.
Hong Kong’s policy pivot didn’t merely fuel headlines—it set the stage for local and global players to place big bets. Many newcomers to Hong Kong’s RWA space, however, misunderstand what the market can and cannot deliver, from believing it offers a legal loophole for Mainland investors to assume that tokenization automatically enhances asset value, liquidity, or accessibility. Others misinterpret what’s actually being tokenized, overlook the ongoing need for traditional financial infrastructure, or wrongly assume that stablecoins are required.
The first common misconception is that Hong Kong offered a regulatory loophole for Mainland Chinese to legally invest in RWA and stablecoin projects. “This is a direct result of the PRC’s 2021 ban and ongoing guidance,” said lawyer Joshua Chu, noting that “Hong Kong’s framework operates symbiotically with these rules, not as a loophole.” He added that “Hong Kong’s digital asset ecosystem is designed to absorb and channel foreign capital, not cater to Mainland retail.” Hong Kong’s regulations block Mainland users and prohibit cross-border retail access, with neither stablecoins nor CBDCs able to systematically bypass these restrictions, Chu explained.
Tokenizing an asset in Hong Kong also does not grant it unrestricted, borderless trading, settlement, or ownership rights, said Chu. He noted that foreign participation is closely monitored, on-chain payments are tightly regulated, and issuers face complex legal and regulatory requirements in both the PRC and Hong Kong.
The second misconception is that RWA projects make the underlying assets more attractive. In reality, putting traditional assets on a blockchain doesn’t fundamentally change their value and, most of the time, doesn’t alter their legal or regulatory status either, according to Andrew Fei, Partner at King & Wood Mallesons. “If you tokenize a bond or share, you have not changed its fundamental legal character. It remains a security and is subject to the same securities laws and regulations as traditional securities,” said Fei, “The introduction of blockchain should not bypass or dilute existing investor protections or regulatory requirements.” “When you open the shiny tokenisation wrapper, what’s inside is still the same asset,” Fei added, “Investors who don’t understand this may overestimate the benefits and take on more risk than they realize.”
Assets suitable for tokenization include treasury instruments, revenue-sharing rights such as solar farms or real estate, commodities like gold and carbon credits, and art or collectibles with verified provenance, according to Kristi Swartz, Partner at DLA Piper. Swartz added that assets unsuitable for tokenization include those with unclear or disputed ownership, legal title to Hong Kong real estate due to registration restrictions, highly perishable commodities, items subject to ownership or trading bans such as ivory or unlicensed securities, and abstract intangible assets whose value is subjective or difficult to monetize.
For instance, Esperanza Fintech’s tokenized gold initiative illustrates just how complex tokenizing even seemingly suitable assets can be. The newly launched Esperanza is registered as a Precious Metals and Stones Dealer and operates under Trust or Company Service Provider regulations, using licensed production and regulatory oversight for every trade of gold. However, their digital gold certificates—while backed by actual bullion and regulated by Hong Kong Customs for compliance and anti-money laundering—are still not available to the public, as the company continues “active dialogues with regulators” and awaits a “clear regulatory framework.” Their application for tokenized business is under review by the SFC, and Esperanza says it will only proceed after concerns from regulatory bodies are satisfied. Notably, their product is designed as a “precious asset-backed instrument,” not a virtual asset or stablecoin, further highlighting the intricate and evolving nature of compliance requirements.
The third major misconception is the assumption that the Hong Kong RWA market is easily accessible, highly liquid, and deeply interested in alternative assets. After successful tokenization, many RWA projects struggle with secondary trading, said Syed Musheer Ahmed, Founder of FinStep Asia. The lack of an active secondary market reduces the attractiveness of RWA tokens for investors more interested in short-term trading, said Ahmed. He added that while some RWA projects offer the function of fractionalizing large investments such as property, the increased affordability still doesn’t make them more attractive investments. The broader market’s appetite for alternative assets in Hong Kong is not necessarily very high, said Ahmed.
According to Reuters on Sept. 22, the CSRC informally advised some major brokerages to pause RWA tokenization in Hong Kong, raising concerns over the surge in digital asset activities offshore. Yet, there has been no official statement or directive from Beijing, leaving many market myths unaddressed and RWA tokenization participants in Hong Kong searching for clarity.
Another widespread misconception is around the nature of tokenized rights. Most RWA projects in Hong Kong don’t tokenize the real-world assets themselves. “Hong Kong’s rules do not permit the tokenization of shares in companies,” said Chu, “nor can most primary title rights in property, securities, or onshore Mainland interests be legally tokenized for retail investors.” Instead, they use regulated financial products such as funds, bonds, or structured notes to capture the economic rights to those assets, and it is these products that are tokenized, according to Fei. Misunderstanding this could make investors misjudge their legal rights, leading to disputes or financial losses, added Fei. “The Hong Kong regulatory framework treats tokenised RWAs as simply ‘tokenised wrappers’ around traditional financial products,” said Fei. “The same legal and regulatory standards apply to the tokenised version as to the underlying traditional product.”
The fifth misconception is about the necessity of traditional finance infrastructure. To purchase a tokenized asset, the buyer still needs to use a traditional instrument such as a bank account or credit card. Issues arise when banks do not allow transfers between an RWA platform and an individual, according to Ahmed, while accepting payment in crypto may lead to large expenses when converting it back to fiat currency.
The last common misconception is that RWA projects require stablecoins to tokenize assets. “You don’t need stablecoins to tokenize assets,” said Haonan Zhou, Assistant Professor of Finance at HKU Business School. “Stablecoins are a separate category of digital asset,” said Fei, “these are distinct regulatory tracks, and market participants should not conflate the two.” While stablecoins are a common tool for on-chain settlement, they are neither essential nor the only means of purchasing tokenized real-world assets, said Chu, adding that RWA tokens can also be traded using cash, fiat rails, or various virtual assets. “Hong Kong’s system is legally and technically flexible to accept multiple on-chain settlement methods,” said Chu, “but never as a workaround for Mainland restrictions.”
Investors who don’t fully understand RWA projects leave themselves open to exploitation, Fei warned, noting they may “fall for schemes that promise unrealistic returns or ownership rights.” “Retail investors are particularly vulnerable to fraudulent mimic tokens circulating on informal channels,” Chu said. Effective risk management requires coordinated action on intellectual property, transparent communication, collaboration with reputable trading platforms, and swift regulatory intervention, Chu added. “The key is complete and accurate information and risk disclosure so investors know exactly what they are looking at,” said Fei.
Subject Matter Experts (in order of last name)
About the Authors
Eunice Xu is a finance writer based in Hong Kong and a former trader. She is currently enrolled in the Master of Journalism program at the University of Hong Kong.
Joe Pan is an editor and producer at Blockwind News. An early adopter of blockchain technology, he has covered major crypto conferences globally since 2019 and moderated Web3 events across Asia. Joe is part of the founding team of Blockwind News and teaches Asia’s first Master of Journalism course on “Covering Cryptocurrency and Blockchain” at Hong Kong Baptist University.
