The Hong Kong subsidiary of one of the Chinese mainland’s largest fund managers, China Asset Management, announced the launch of the world’s first renminbi-denominated tokenized money market funds on Thursday, stepping up its efforts to capitalize on business opportunities in the city’s burgeoning virtual asset sector.

The company, which rolled out a similar fund in US dollars, has expanded its tokenized product lineup following the February launch of a digital money market fund priced in Hong Kong dollars. The asset manager said these products form one of the most comprehensive suites of tokenized money market funds globally.

The funds are distributed through a dual-track model, enabling investors to trade via traditional channels such as banks and brokerages, or through licensed virtual asset trading platforms in Hong Kong. This is believed to provide both institutional and retail investors, as well as cryptocurrency holders, with compliant yield-generating options on blockchains.

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Gan Tian, CEO of China Asset Management (Hong Kong), said these tokenized products will help prepare the company for the growth of stablecoin. If offshore renminbi-pegged stablecoin wins regulatory approval in the future, these funds could serve as interest-bearing tools that allow investments using stablecoin, he added.  

Hong Kong’s Stablecoins Ordinance, which will take effect on Aug 1, and the special administrative region government’s Policy Statement 2.0 on the Development of Digital Assets released in late June are expected to lay the groundwork for the digitalization and tokenization of Hong Kong’s financial markets, Gan said.

He said he believes more traditional financial institutions will enter the digital asset sector in the coming year, and an increasing number of financial products will be available on blockchains to enable 24/7 trading.

Tokenization refers to how traditional assets are turned into digital tokens on a blockchain, which is considered a way to make transactions cheaper, faster, and more transparent.

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Chan Man-ki, head of products and investment solutions at CITIC Securities Wealth Management (Hong Kong), said that as technology advances and regulations become more refined, a wider range of products, such as insurance, will be tokenized.

According to China Asset Management (Hong Kong), tokenized funds based on blockchain technology offer a public and immutable ledger that records all transactions and ownership details, providing investors with real-time transparency. By contrast, transaction histories and operations of traditional funds that are managed by centralized financial institutions like banks may not be easily accessible to investors, the company said.  

A report by McKinsey & Company last year said that tokenized money market funds are expected to become the fastest-growing digital asset class, estimating they could reach $400 billion by 2030.

Contact the writer at irisli@chinadailyhk.com