Hong Kong has a clear pathway to potentially double the size of its fund industry by transitioning from legacy infrastructure to token-based finance as there is strong demand from investors for the features available through digital money, such as 24/7 trading access, according to a recent report.
This evolution marks a departure from traditional “message-based” systems of transaction settlement, where intermediaries merely exchange instructions to update separate, siloed ledgers – a process often constrained by settlement lags and reconciliation overhead, finds the Digital Money: A Chance for Hong Kong’s Fund Industry to Double Up report from Boston Consulting Group and Aptos Labs, with contributions from Hang Seng Bank.
In contrast, “token-based” finance embeds value, ownership and compliance logic directly into digital tokens, allowing assets to settle instantly and securely on a shared ledger, adds the report, which outlines a strategic roadmap for this expansion, backed by new results from a collaborative pilot under Phase 2 of the e-HKD Pilot Programme under Project e-HKD+.
By using digital money, including hypothetical e-HKD and tokenized deposits, to settle tokenized fund transactions on a public-permissioned blockchain, the collaboration pilot identified three key factors that can accelerate adoption – compliance readiness, functional capabilities and commercial viability.
Blockchain technology can now effectively meet institutional standards for security, privacy and compliance, the pilot study finds, highlighting the need for these features to be built. Financial institutions can significantly reduce counterparty risk, lower operational costs and offer 24/7 liquidity by embedding ownership and settlement logic directly into the token itself.
The market is ready for this innovation, according to the report’s survey of 500 retail investors, conducted in May and June 2025 to validate the commercial potential of these capabilities, as some 61% of investors surveyed indicated they would double their allocations, while 97% expressed an interest in the features enabled by tokenized funds and digital money.
Investors prioritize utility over the specific form of digital currency, the research shows, and they remain largely agnostic regarding the relative merits of e-HKD or tokenized deposits, provided these tools deliver key benefits like flexibility, instant settlement and 24/7 access. Should privately issued options like tokenized deposits mature, the report notes, demand for a retail central bank digital currency may ultimately be limited.
While token-related technology is ready, coordinated action is required to fully capture this value, the report advises. To define Hong Kong’s leadership in this new era, the authors outline three critical priorities:
- accelerating technology adoption by scaling interoperable, programmable and privacy-preserving blockchain infrastructure that meets institutional standards
- ensuring regulatory readiness by continuing to harmonize frameworks to promote trust, transparency and cross-border consistency
- fostering business-model innovation by developing new products, services and market structures that leverage tokenization and programmable digital money for sustainable growth.
“We view 2026 as the definitive inflection point,” says Yue Hong Zhang, a Boston Consulting Group managing director and partner. “The industry must now pivot from testing technical feasibility to building commercial scale. No single institution can modernize the financial system alone. We need banks, regulators and technology providers to move in lockstep to turn these pilot successes into the new market standard.”