Hong Kong is advancing its digital asset strategy by preparing to introduce regulated stablecoin settlement for tokenized funds and expanding blockchain-based infrastructure in the financial sector. The government also intends to initiate tests involving the tokenization of over HK$1.3 trillion worth of Exchange Fund Bills by the end of 2026.
Regulated stablecoin settlement for tokenized funds
Hong Kong’s 2026 Policy Address instructed financial regulators to enhance legal frameworks and support the integration of regulated stablecoin settlement in licensed virtual asset venues. This approach would allow stablecoins—blockchain-based coins whose value is pegged to reserve assets such as the US dollar—to be used not just for trading but for settling tokenized money market funds and other traditional investment products.
The Securities and Futures Commission (SFC) will review and refine its virtual asset licensing guidelines, aiming to clarify compliance obligations for firms in the sector. Authorities also intend to strengthen oversight for tokenized investment products, including rules on their issuance and ongoing supervision.
By linking regulated digital currencies with tokenized funds, Hong Kong seeks to establish a comprehensive regulatory foundation for digital asset integration across the financial system.
Hong Kong’s policy direction expands the use of stablecoins beyond simple payments, aiming for institutional adoption across diverse digital markets through regulatory clarity.
Earlier this year, Hong Kong awarded its first stablecoin issuer licenses, solidifying the regulatory framework needed for institutional-grade applications.
The policy also covers broader asset tokenization, including gold and other real-world assets made available to qualified investors through licensed platforms. Officials see stablecoin settlement as a core building block in the move toward an integrated, digitally enabled market infrastructure.
Mini dictionary: The Securities and Futures Commission (SFC) is Hong Kong’s main financial regulator overseeing securities, futures, and the broader virtual asset industry.
Testing tokenization of HK$1.3 trillion in Exchange Fund Bills
The Hong Kong Monetary Authority (HKMA), which functions as the territory’s central banking institution, will conduct tokenization trials involving more than HK$1.3 trillion of Exchange Fund Bills by the end of 2026. The aim is to allow banks to manage and deploy these assets more efficiently at all hours.
At the same time, regularization of digital bond issuance, alongside trials for digital currencies used in settlements, dividend payments, and redemption, are being explored. These initiatives could help extend the use of stablecoins and other digital payment mechanisms throughout the asset lifecycle.
At the infrastructure level, the HKMA targets delivery versus payment settlement with central bank digital currencies (CBDC) and seeks to operate 24/7 under the EnsembleTX project by year-end. The institution continues to investigate further applications for tokenized deposits across the sector.
Mini dictionary: The Hong Kong Monetary Authority (HKMA) is the de facto central bank of Hong Kong, responsible for monetary policy, financial market stability, and banking supervision.
Digital bonds issued in Hong Kong between 2025 and the first half of 2026 accounted for nearly half of global issuance, positioning the city as a leader in digital securities innovation. The new initiatives aim to build on this momentum by supporting further tokenization across capital markets.
| Initiative | Target/Scale | Timeline |
|---|---|---|
| Tokenization of Exchange Fund Bills | Over HK$1.3 trillion | End of 2026 |
| Launch of digital asset custody monitoring | SFC oversight system | Second half of 2026 |
| Global share of digital bonds issued | Almost 50% | 2025-H1 2026 |
Additionally, the SFC will introduce a monitoring system for digital asset custody services in the second half of 2026. Broader market and anti-money-laundering monitoring components are scheduled to become operational in 2027.
Taken together, these moves demonstrate Hong Kong’s commitment to integrating stablecoin settlement, tokenized investment products, and digital bonds within a unified regulatory framework for the financial sector.
