Ronald Leung’s original, dated commentary is reproduced below. Views, invitations and product references reflect the time of publication; they are not investment advice, an offer, a guarantee of return or confirmation of current availability.
Part 2 of my answer to South China Morning Post SCMP.
Part 1 ended on the statute. Section 53ZTZ of Cap. 615 already defines a precious-asset-backed instrument, and carves it out from securities, futures contracts, interests in a collective investment scheme, structured products, OTC derivative products and virtual assets. In law, Hong Kong is ready.
So why has nobody built on it.
Banks in the region have already issued gold tokens. Every one of them is an investment product — buy, hold, sell, redeem. That is the business gold has always been in, with a better interface on top.
Gold has the potential to lift an economy if it can do one more thing: when gold can be transferred and settled between parties, not only held.
That step needs a framework, and nobody has written one.
Hong Kong Customs oversees dealing in precious metals — import and export, physical delivery, the cross-border side. The SFC's remit is drawn around securities-type products: collective investment schemes, futures contracts, structured products, OTC derivatives. The HKMA's mandate is the Hong Kong dollar and the monetary system.
Tokenised gold used as a medium of exchange is all three at once.
-> It is bullion. -> It is an investment. -> And it touches settlement.
That is not a failing on anyone's part. A regulator can only supervise inside the perimeter its own statute draws, and none of these three statutes was written with this instrument in view. Asking any one of them to take it on alone is asking for something the legislature has not given it.
And the missing piece is not another rule. It is a single authority mandated to hold all three functions in one place.
Full walkthrough in the video.
Disclosure: the Esperanza group holds SFC Type 4 and Type 9 licences and a Hong Kong Customs Category A precious metals and stones dealer registration, and works on tokenised gold.
#HongKong #Tokenisation #Gold