Hong Kong tax system optimization implemented: When funds can simultaneously allocate digital assets and real estate, the 30 trillion RWA market welcomes a key puzzle piece

Written by: Liang Yu

Edited by: Zhao Yidan

In early March 2026, Hong Kong’s Financial Services and the Treasury Bureau Secretary, Xu Zhengyu, announced a series of tax incentive reforms targeting funds, family investment control tools, and associated rights at the Legislative Council’s Financial Affairs Committee meeting. According to Zhitong Finance, these reforms include six specific measures, most notably expanding the eligible investment categories for funds and control tools—covering real estate outside Hong Kong, carbon emission derivatives, insurance-linked securities, private debt investments, digital assets, precious metals, and certain commodities—all included within tax-exempt investment scope.

At first glance, this appears to be a routine adjustment of tax policies. However, when viewed alongside Hong Kong’s recent actions in the gold clearing system, stablecoin licensing, and RWA (Real-World Asset) projects, a larger picture emerges: Hong Kong is systematically building a two-way closed loop from “asset digitization” to “digital assetization.” Its core focus is on the most innovative track in global financial innovation today—the tokenization of real-world assets.

This article, from the perspective of the RWA Research Institute, dissects the deeper logic behind this policy adjustment and explores how Hong Kong is quietly paving a high-speed highway for RWA compliance by positioning digital assets alongside traditional alternative investments.

1. What exactly has the new policy changed? The deeper meaning behind the checklist

To understand the profound significance of this policy change, we first need to clarify what it has actually altered.

According to Xu Zhengyu’s announced measures, the core revisions include six aspects: expanding the definition of funds to include retirement funds, donation funds, and certain single-investor funds; broadening the eligible investment categories for funds and control tools; removing the 5% transaction threshold; relaxing tax exemptions for specific purpose entities; easing anti-avoidance provisions in the unified fund tax exemption regime; and optimizing tax relief arrangements for associated rights.

Most notably, the second point—expanding eligible investment categories—has garnered attention. The new scope explicitly includes real estate outside Hong Kong, carbon emission derivatives/quotas and credits, insurance-linked securities, equity interests in non-corporate entities, loans (including private debt), digital assets, precious metals, and certain commodities.

At first glance, this is simply a new list of investment targets. But a closer look reveals a key question: why are these seemingly unrelated asset classes grouped together?

The answer likely lies in the fact that this list covers two core asset types in RWA tokenization. One is traditional “real-world assets”—real estate, private debt, precious metals, and commodities—characterized by physical form, predictable cash flows, and mature valuation models, yet often facing liquidity shortages, high investment thresholds, and complex ownership transfers. The other is digital assets—innately divisible, programmable, and globally tradable—long outside traditional financial regulation, making it difficult for mainstream institutions to trust and fund.

Placing these two asset types under the same tax incentive framework sends a clear regulatory signal: Hong Kong is attempting to understand and accept digital assets using the cautious management framework applied to traditional assets, while also leveraging the technological advantages of digital assets to unlock the liquidity potential of traditional assets. This is a bidirectional “breaking down walls.”

According to Xu Zhengyu, these measures complement government policies in related areas—such as promoting carbon trading, digital assets, and trading in precious metals and commodities. In other words, this is not an isolated tax policy adjustment but part of Hong Kong’s multi-layered financial center strategy.

It’s also noteworthy that the reforms remove the previous 5% transaction threshold, granting greater flexibility for funds, control tools, and specific purpose entities to profit from eligible investments. As long as profits are derived from qualified investments and meet specified conditions, gains can be exempt from profits tax. This means that in the future, interest income, rental income, and other earnings from RWA-related assets held by funds could enjoy tax benefits, greatly increasing institutional willingness to allocate such assets.

Alongside these measures, Hong Kong has also set substantive activity requirements for the unified fund tax exemption—namely, an average of at least two qualified employees and annual operating expenses of no less than HKD 2 million in Hong Kong. This threshold aims to ensure that funds enjoying tax benefits have genuine commercial presence in Hong Kong, not just “mailbox companies.” For institutions aiming to develop RWA businesses locally, this means establishing substantive teams and operational capabilities, which benefits industry health in the long run.

2. From approval cases to a hundred-billion-dollar market, Hong Kong’s RWA is taking off

Building the policy framework is only the first step. The real significance of these tax reforms lies in Hong Kong’s accumulated experience in RWA implementation over the past year and the growing market demand.

Just before the policy announcement, Hong Kong saw its first real estate RWA project officially approved. Deryn Holdings’ two RWA tokenization products recently received approval from the Hong Kong Securities and Futures Commission. Specifically, Deryn Securities will distribute RWA tokens, and Deryn Digital will tokenize its fund interests. The two tokenized assets are a limited partnership fund holding the Deryn Tower in Central Hong Kong and a limited partnership fund investing in private equity projects.

The Deryn Tower, located at 92-96 Wellington Street, Central, Hong Kong, is within walking distance of the International Finance Centre (about five minutes) and Landmark Square (about seven minutes). Deryn Holdings purchased the top five floors and naming rights for over HKD 280 million in 2023. Tokenizing ownership of this physical commercial property not only enhances liquidity and trading efficiency but also provides a replicable compliance model for integrating traditional commercial real estate with digital finance.

As global financial markets and institutional investors accelerate embracing on-chain mapping of real-world assets, tokenization is becoming a crucial bridge connecting traditional finance and decentralized finance. Hong Kong, with its clear, robust, and comprehensive legal, regulatory, and policy framework, is emerging as a global hub for digital assets and a super-connector between high-quality assets and on-chain capital.

Market data also confirms this trend. According to CryptoRank.io cited by Cointelegraph, tokenized real-world assets have a total locked value of USD 21 billion. McKinsey estimates that the future market for tokenized assets could reach USD 2–4 trillion. In terms of user base, RWA holders have grown about tenfold in the past year, now totaling nearly 800,000 users. Among them, 294,000 hold publicly traded stock RWAs, and 206,000 hold commodity RWAs—these two categories constitute the main part of RWA participants. This data reveals an important trend: standardized, highly liquid asset types are becoming the main drivers of RWA market expansion.

Hong Kong’s family office ecosystem is also rapidly growing. Market research estimates that a single family office in Hong Kong employs nearly 10,000 people and generates close to HKD 13 billion annually. The Hong Kong government aims to establish or expand at least 220 family offices in the city over the next three years. Additionally, Xu Zhengyu disclosed that as of the end of last month, nearly 3,200 applications had been received under the new capital investor entry scheme, with an expected investment of about HKD 95 billion. These family offices and ultra-high-net-worth investors are the natural target clients for RWA products—they are familiar with traditional asset allocation logic and open to new technologies.

3. The bidirectional flow of capital and assets: a closed loop taking shape

When viewing these policies and cases together, a more imaginative picture emerges: Hong Kong is building a “dual-flow” RWA ecosystem—“asset on-chain” and “funds into real assets”—forming a closed loop.

“Asset on-chain” refers to converting traditional real-world assets—be it office buildings in Central Hong Kong, private credit assets in London, or gold from African mines—into compliant digital tokens through tokenization processes. The core value of this process is lowering investment thresholds, increasing liquidity, enabling 24/7 trading, and providing transparent information.

Analysts note that large financial institutions are increasingly eager to deploy in RWA, with high demand for tokenizing standard assets like gold, foreign exchange, stocks, and high-rated bonds. These assets have clear ownership rights, mature trading rules, and high market recognition, aligning well with the risk appetite and scale needs of compliant institutions. Tokenizing such standardized assets can leverage traditional financial systems to reduce verification and cross-border compliance costs while utilizing blockchain’s advantages in real-time net asset value calculation, trading efficiency, and cross-border circulation.

Meanwhile, as standardized assets become mainstream, the risk appetite in compliant on-chain ecosystems is rising. Some mature compliant on-chain ecosystems are exploring higher-risk, higher-return asset types—industrial assets, traditional non-standard assets, and even pre-listing projects—gradually entering the scope of regulated institutions. RWA tokenization of these assets can diversify on-chain asset supply and address industry pain points like opaque asset management data, delayed cash flow monitoring, and untimely valuation adjustments through transparent data on-chain.

“Funds into real assets” is the other half of this loop. The recent tax reforms allowing funds to invest in digital assets mean that compliant funds can directly purchase digital tokens representing ownership of real-world assets. This is especially significant for Hong Kong’s developing gold market.

According to 21st Century Business Herald, Hong Kong’s gold market will see a key infrastructure breakthrough in 2026—the launch of a gold central clearing system, which has signed a cooperation agreement with the Shanghai Gold Exchange. Hong Kong is also promoting its upgrade to an international gold trading hub through tax incentives, industry associations, and talent training. Secretary Xu Zhengyu emphasized: “Establishing a gold central clearing system is a concrete measure to consolidate and enhance Hong Kong’s status as an international financial center, bringing new growth points.”

Imagine a family office in Hong Kong purchasing a digital gold token representing a South African gold mine via a compliant digital trading platform. The gold is stored in a vault recognized by the London Bullion Market Association, with clear ownership, settled instantly on-chain, and enjoying Hong Kong’s tax advantages. This is a real-world example of “funds into real assets.”

Similarly, in carbon trading, the logic applies. Hong Kong actively promotes a carbon trading market, and including carbon emission derivatives/quotas and credits in the eligible investment scope means funds can participate in global carbon market pricing and trading via holding carbon credit tokens.

Research indicates that with the issuance of the first licenses, the rollout of digital asset policies, and the launch of digital asset platforms, digital assets are gradually becoming a key part of mainstream financial infrastructure under compliant conditions. Hong Kong’s digital asset policy deployment in the 2026 Budget clarifies the timeline for subsequent regulation, infrastructure development, and related legislation—marking a systematic acceleration under the “Policy Declaration 2.0” plan.

4. Hong Kong’s next step: becoming a global connector of assets

Placed in the context of global competition, Hong Kong’s strategic intent becomes clearer.

A research report by China Galaxy Securities constructs a “six-dimensional RWA policy framework,” categorizing global RWA regulation into two main paths: “strict regulation, safety prioritized” (e.g., US, UK, Japan) and “innovation-oriented, pilot prioritized” (e.g., Singapore, UAE, South Korea). The US, UK, and Japan maintain high thresholds in rights confirmation, licensing, and trading, emphasizing safety. Singapore, UAE, and South Korea focus on regulatory sandboxes, access mechanisms, and tax friendliness, reflecting an innovation-driven approach.

Hong Kong’s positioning is more balanced—supporting innovation in tax, rights confirmation, and stablecoins, but maintaining high licensing and circulation restrictions, embodying a “balanced openness + strict entry” model. This approach offers the advantage of gaining institutional trust through clear regulation while attracting innovative capital via flexible tax policies.

Hong Kong also possesses a unique advantage that others cannot easily replicate—deep integration with the Mainland Chinese market.

In February 2026, the People’s Bank of China and eight other departments issued a notice on further preventing and resolving risks related to virtual currencies, and the China Securities Regulatory Commission released guidelines on regulating domestic assets issued abroad as asset-backed securities tokens. These documents explicitly define RWA tokenization in China as activities involving the use of encryption and distributed ledger technology to convert asset ownership, income rights, and other interests into tokens or similar rights for issuance and trading.

Most importantly, the guidelines retain a compliant pathway for domestic entities to conduct real-world asset tokenization abroad. Industry insiders expect that approved projects in Mainland China can carry out RWA tokenization in Hong Kong. This means that the vast real estate stock, trade receivables, and infrastructure projects in the Greater Bay Area could be tokenized via compliant channels in Hong Kong, connecting to global liquidity.

Referring back to the recent tax reforms, Xu Zhengyu stated that the measures are expected to attract more funds and family offices to establish and operate in Hong Kong, creating new opportunities for asset and wealth management, and strengthening Hong Kong’s position as a leading asset and wealth management hub. This also aligns with Hong Kong’s broader development in digital assets, precious metals, and commodities trading.

This clarifies the ultimate goal of the policy: not merely tax competition, but using tax incentives to transform Hong Kong into a “super-connector” for RWA tokenization—linking global liquidity and real assets. In this connector, sovereign wealth funds from the Middle East, family offices from Europe and America, and institutional investors from Mainland China can access global real-world assets through compliant channels. Meanwhile, real estate, infrastructure, and commodities worldwide can be tokenized and issued via Hong Kong’s regulatory framework, reaching a broader capital pool.

When family offices can easily allocate digital shares of a London office building or gold tokens from an African mine as easily as stocks, how will the underlying asset allocation logic change? Hong Kong has already pressed the start button for this future. For industry practitioners, the question is no longer “Will they come?” but “How to participate compliantly?”

(Risk warning: This article is based on publicly available policy information and industry reports for analysis and trend discussion, not investment advice. Digital assets and RWA investments involve high risks. Participants should strictly comply with relevant laws and regulations and make cautious decisions based on their risk tolerance. For specific investment operations, please refer to official guidelines issued by Hong Kong’s regulators such as the HKMA and SFC.)

References:

1. Zhitong Finance. (March 2, 2026). Xu Zhengyu: Hong Kong plans six tax optimization measures to enhance attractiveness and competitiveness. Investing.com.

2. Jinwu Finance. (February 26, 2026). Deryn Holdings’ RWA tokenization plan approved by HK SFC, advancing tokenization of Deryn Tower and Animoca Brands LPF. Securities Star.

3. Guo Congcong, Yu Jixin. (February 28, 2026). Two major financial initiatives in Hong Kong! Competing for gold pricing power, stablecoin licensing underway. 21st Century Business Herald (via Sina Finance).

4. Jinse Finance. (January 22, 2026). Data: Tokenized RWA TVL reaches USD 21 billion, with US Treasuries accounting for 42.4%. Mitrade.

5. Jiao Jian. (February 28, 2026). Hong Kong approves first real estate RWA project. Caijing Magazine (via Caijing.com).