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China tells brokers to pause real-world asset tokenisation in Hong Kong

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China’s securities regulator (CSRC) has quietly advised several domestic brokerages to halt their real-world asset (RWA) tokenisation activities in Hong Kong, according to sources familiar with the matter. The move highlights Beijing’s caution as Hong Kong accelerates its push to become a regional hub for digital assets.

What’s happening

  • At least two major Chinese brokerages received informal instructions in recent weeks to pause RWA tokenisation businesses offshore.

  • RWA tokenisation converts traditional assets — like stocks, bonds, funds, and real estate — into blockchain-based digital tokens.

  • Regulators are concerned about risk management and whether firms’ claims are backed by “strong, legitimate businesses.”

Market reaction

  • Shares in Chinese brokerages with Hong Kong exposure slumped:

    • Guotai Junan International fell 7.25%

    • GF Securities dropped 2%

  • The broader Hang Seng Index closed down 0.9%.

Regulatory backdrop

  • China banned cryptocurrency trading and mining in 2021, citing financial stability risks.

  • While Hong Kong has rolled out a stablecoin regime and tokenisation “sandbox” (Project Ensemble), Beijing has kept its stance restrictive.

  • Last month, regulators told major Chinese brokers to stop publishing research endorsing stablecoins, signalling unease about speculative hype.

  • The HKMA confirmed it is conducting a legal review of tokenisation, initially focused on bonds.

Virtual asset enthusiasm in Hong Kong

  • GF Securities (HK unit) launched yield-generating “GF tokens” in June, tied to USD, HKD, and offshore RMB.

  • CMBI recently helped Shenzhen Futian Investment raise 500 million yuan through an RWA-based digital bond.

  • Seazen Group, a Chinese property developer, set up an institute in Hong Kong to explore tokenisation.

  • HKMA said 77 firms have expressed interest in applying for a stablecoin license as of August 31.

Global context

  • The RWA market is worth about $29 billion today and could exceed $2 trillion by 2030, according to industry forecasts.

  • Hong Kong wants to capture this growth, but Beijing’s intervention shows cross-border limits remain.

  • It’s unclear how long the CSRC’s guidance will stay in place or whether it will become a formal restriction.

EU finance ministers agree on roadmap for digital euro launch

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European Union finance ministers reached a compromise agreement on Friday outlining the roadmap for a digital euro, a central bank–backed electronic currency designed to reduce Europe’s reliance on U.S.-dominated payment systems like Visa and Mastercard.

At a meeting in Copenhagen with ECB President Christine Lagarde and European Commissioner Valdis Dombrovskis, ministers agreed that before the European Central Bank makes a final decision on issuance, the Council of Ministers will have the right to weigh in, including on the crucial issue of holding limits—caps on how many digital euros individuals can store to prevent destabilizing bank deposits.

“The compromise that we reached is that before the ECB makes a final decision in relation to issuance… there would be an opportunity for a discussion in the Council of Ministers,” said Paschal Donohoe, chair of the finance ministers’ group.

The ECB has pitched the digital euro as both a strategic sovereignty project and a response to the rise of U.S. stablecoins promoted under President Trump’s administration. Lagarde framed it as “not just a means of payment, but also a political statement” about Europe’s ability to control its own cross-border financial infrastructure.

Still, the project faces hurdles. Legislation proposed in June 2023 has yet to be approved by the European Parliament or the European Council, with critics warning about costs, privacy concerns, and risks to bank funding. The Council aims to conclude its work by year-end, while the ECB hopes legislation will be finalized by June 2025. If approved, the digital euro could launch within three years.

For now, the compromise marks a step forward for a project that could reshape Europe’s financial system and reduce dependence on non-EU providers.

India Shies Away from Full Crypto Regulation, Citing Systemic Risk Concerns

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India is unlikely to adopt a comprehensive legal framework for cryptocurrencies, opting instead for partial oversight to avoid exposing its financial system to systemic risks, according to a government document seen by Reuters.

Key Points from the Document

  • RBI’s stance: The Reserve Bank of India believes regulating cryptocurrencies would effectively grant them legitimacy and could allow the sector to grow into a systemic risk.

  • Legislation status: A 2021 draft bill to ban private cryptocurrencies was never passed. A planned 2024 discussion paper was deferred pending U.S. regulatory clarity.

  • Ban vs. regulation: While a ban could curb speculative risks, it would not eliminate peer-to-peer transfers or trading on decentralized exchanges.

  • Current approach:

    • Global exchanges may operate in India if they register locally and comply with anti–money laundering checks.

    • Punitive taxes discourage speculative activity.

    • Current laws act as a deterrent against fraud and illegal use.

  • Scale of adoption: Indians hold about $4.5 billion in crypto assets, which remains non-systemic for financial stability at present.

Global Context

  • United States: Under President Trump, the U.S. legalized wider use of stablecoins via the GENIUS Act (July 2025).

  • China: Continues to ban cryptocurrencies but is considering a Yuan-backed stablecoin.

  • Japan & Australia: Developing cautious regulatory frameworks without aggressive promotion.

Stablecoin Concerns

  • The document highlights that widespread adoption of dollar-backed stablecoins could:

    • Fragment India’s Unified Payment Interface (UPI) system.

    • Weaken domestic payment infrastructure.

    • Create new risks from liquidity shocks and global market volatility.

Outlook

India’s “wait-and-watch” approach underscores a balancing act: deterring speculative trading without granting legitimacy that could make crypto mainstream. While global peers move toward clearer frameworks, India seems intent on limiting crypto’s footprint in its financial system until international standards stabilize.