The China Securities Regulatory Commission (CSRC) told mainland brokerages to stop tokenizing real world assets in Hong Kong, as the market exceeded $24 billion. The move places immediate pressure on issuers, brokers and compliance staff within Hong Kong’s digital hub agenda. The directive underscores rising caution over speculative risks and weak controls.
The CSRC warned that risk controls remain weak and speculation could surge. Hong Kong spent months building the LEAP framework, which includes a stablecoin licence and tokenized bonds. The stablecoin rules began on 1 August 2025. Beijing’s caution clashes with Hong Kong’s push, and as a result, launches stall, products stay under review and cross-border capital may face new limits.
Implications on China´s decision
Regulatory friction is increasing, with projects being put on hold and stricter KYC, AML, and custody requirements raising barriers to entry. These hurdles delay launches and force market participants to strengthen internal processes in order to meet complex compliance standards.
Liquidity risks also come into play, as delays in listings and integration with DeFi pools reduce short-term market provision. At the same time, compliance costs are climbing, driven by more rigorous on-chain audits and the need for reserve proof checks to prevent over-issuance and reinforce transparency for both regulators and investors.
The impact on institutional adoption is equally notable, with managers reassessing business models and reviewing tokenized assets under management.
Hong Kong must answer Beijing’s move and the CSRC will keep watching. Until then, product plus compliance teams will focus on reserve traceability and legal papers before any tokenization project resumes.
