The first tokenized fund aimed at the public in the Asia-Pacific region has launched in Hong Kong

Recently, a fund company announced that its "Hong Kong Dollar Digital Currency Fund" has been approved by the Hong Kong Securities and Futures Commission, becoming the first tokenized fund for retail investors in the Asia-Pacific region. The fund will officially be listed on February 28, 2025, marking a key breakthrough in the transition of tokenized assets from being exclusive to institutions to the mass market.

Characteristics and Advantages of Tokenization Funds

Tokenization funds are digital tokens that represent fund shares as underlying assets "on-chain". Ownership of the fund is represented through tokens. Compared to traditional funds, tokenization funds are innovative in terms of ownership attribution, information transparency, and trading models:

1. Ownership is clearer, recorded through blockchain.
2. Higher information transparency, traceable transaction process.
3. The trading model is more flexible, supporting 24/7 trading.
4. Lower management costs, automated execution of smart contracts.

Features and Redemption Mechanism of Hong Kong Dollar Digital Currency Fund

The fund primarily invests in Hong Kong dollar short-term deposits and high-quality money market instruments, while providing three share classes in Hong Kong dollars, US dollars, and Renminbi. As a tokenization fund, its core feature lies in its special issuance method:

• Adopt a custodial tokenization model
• Subscribe or redeem in the form of Token through qualified distributors
• Issued only for investors in the Hong Kong region

Subscription Process:

1. Investors subscribe to fund tokens through qualified distributors.
2. The distributor notifies the fund manager and pays the subscription amount.
3. The fund manager issues tokenized shares and instructs the minting of tokens.
4. The token custodian will keep the tokens in the distributor's blockchain wallet.
5. Distributors allocate Tokens to investors

Redemption process:

1. Investors apply to the distributor to redeem tokens.
2. The distributor issues a redemption notice to the fund manager.
3. The fund manager redeems the tokenized shares and destroys the corresponding tokens.
4. The fund manager pays the redemption proceeds to the distributor
5. The distributor pays the profits to the investors and deducts the corresponding Token.

The Future Outlook of Tokenization Funds

The launch of this tokenization fund marks a new stage in the application of technology in the Web 3.0 era, providing opportunities for retail investors to participate. Although the current investment in underlying assets mainly focuses on low-risk money market funds, more diversified investment strategies may emerge in the future:

1. Expand the range of investment assets and launch high-yield products.
2. Explore cryptocurrency trading for 24/7 instant transactions
3. Further optimize on-chain transactions and global liquidity

With the maturity of blockchain technology and the improvement of the regulatory environment, asset tokenization is expected to become an important force in reshaping the global asset management landscape.