Hang Seng launches tokenized gold ETF for physically backed gold bars

On January 28, Hang Seng Investment Management announced the launch of a new physical gold exchange-traded fund (ETF) that tracks the LBMA Gold Price.

The Hang Seng Gold ETF started trading on the Hong Kong Stock Exchange on Wednesday under the stock code 3170.  The Hang Seng Gold ETF opened at HK$18.40 and closed at HK$17.44, up HK$1.44, or 9%, from its previous close of HK$16.00. 

The fund experienced a turnover of HK$131.98 million during the session with 7.54 million units traded, a bid of HK$17.43, an ask of HK$17.44, a lot size of 50, and an intraday range of HK$17.36 to HK$18.40.

According to product information, the fund is a passive exchange-traded fund (ETF) that holds actual gold bars that meet the London Bullion Market Association’s standards for satisfactory delivery.

Hang Seng launches tokenized gold ETF with restrictions

In a product key facts statement, the fund manager stated that the ETF’s listed class has a board lot size of 50 units and trades in Hong Kong dollars. It has an estimated annual tracking difference of -0.50% and an expected ongoing fee of 0.40% annually. 

According to Hang Seng, the fund has no plans to distribute dividends. Thus, profits will be solely dependent on changes in the price of gold.

In addition to its traditional ETF units, the fund also offers a tokenized class of units. These tokenized units are first issued on Ethereum and may be extended to other public blockchains. According to its prospectus, HSBC is acting as the tokenization agent for the product.

The investment firm noted that, even though these tokenized ETF units are created on a public blockchain, they cannot be freely traded on secondary markets. Instead, investors must only subscribe to or redeem them through authorized distributors. 

Additionally, according to Hang Seng’s product page, the units are not yet available for subscription and won’t be made available until the necessary approvals are obtained.

The Hang Seng Gold ETF debuted as gold extended its rally on Thursday. It reached a new high of $5,523 per ounce. Gold prices increased $217.77, or 4.1%, throughout the day, marking a 30-day gain of $976.65, or a 22.56% increase, as investors continue to look for safe-haven assets amid economic and geopolitical uncertainties. 

HKMA pilot advances real‑value tokenized deposit settlement infrastructure

The debut coincides with Hong Kong’s ongoing efforts to market itself as a hub for cryptocurrency assets under regulatory supervision, with officials supporting trials that connect blockchain technology with traditional finance. 

For instance, the Hong Kong Monetary Authority unveiled the pilot phase of Project Ensemble in November of last year, testing real-value transactions with tokenized deposits and digital assets.

The monetary authority said that the pilot phase moves the project from a sandbox experiment to a live, value-bearing settlement. The HKMA called this a “pivotal” step in Hong Kong’s crypto future.

In 2024, the HKMA launched the Project Ensemble sandbox to test the use of e-HKD to enable tokenization in the conventional banking sector. Using experimental tokenized deposits, the sandbox has enabled participating banks and industry partners to test end-to-end digital asset settlement.

HKMA revealed that the new pilot is anticipated to operate through 2026, and will first focus on tokenized money-market fund transactions and real-time liquidity and treasury management.

According to HKMA, the pilot environment will be gradually improved to enable settlement in tokenized Central Bank Money (CeBM) 24/7. The broader tokenization ecosystem in Hong Kong will continue to grow as a result of this evolution.

“To scale tokenization of investment products, interoperability is key. A critical step in that direction is today’s initiative announced by the HKMA, which will gradually allow interbank settlement of tokenized deposits in real time 24/7.”

–Julia Leung, CEO of  Securities and Futures Commission. 

The HKMA will continue to work closely with the Securities and Futures Commission (SFC) to advance the practical applications of tokenization technology across a wide range of asset classes, use cases, and sectors within the financial industry.

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