Digital money doubles Hong Kong’s fund industry potential

Hong Kong has a clear pathway to potentially double the size of its fund industry by transitioning from legacy infrastructure to token-based finance, according to a new whitepaper from Boston Consulting Group (BCG) and Aptos Labs, with contributions from Hang Seng Bank.

The report, titled Digital Money: A chance for Hong Kong’s fund industry to double up, outlines a strategic roadmap for this expansion, backed by new results from a collaborative pilot under Phase 2 of the e-HKD Pilot Programme under Project e-HKD+. The pilot showed strong demand from investors for the features available through digital money, such as 24/7 trading access.

This evolution marks a departure from traditional "message-based" systems of transaction settlement, where intermediaries merely exchange instructions to update separate, siloed ledgers—a process often constrained by settlement lags and reconciliation overhead. In contrast, "token-based" finance embeds value, ownership and compliance logic directly into digital tokens, allowing assets to settle instantly and securely on a shared ledger.

“We have the technical proof and the commercial validation. Investors are ready to increase allocations as soon as the market removes the friction,” said David Chan, managing director and partner at BCG. “Financial institutions must now move beyond pilots. Institutions that integrate these features into their core business will capture this new capital.”

Pilot transaction under Project e-HKD+

Technical and commercial viability for these transactions was demonstrated in a recent collaboration between BCG, Aptos Labs and Hang Seng Bank during Phase 2 of the e-HKD Pilot Programme under Project e-HKD+. By using digital money, including hypothetical e-HKD and tokenised deposits, to settle tokenised fund transactions on a public-permissioned blockchain, the collaboration identified three key factors that can accelerate adoption: compliance readiness, functional capabilities and commercial viability.

Blockchain technology can now effectively meet institutional standards for security, privacy and compliance, the pilot study found, highlighting the need for these features to be built in as they are on Aptos’s blockchain. Financial institutions can significantly reduce counterparty risk, lower operational costs, and offer 24/7 liquidity by embedding ownership and settlement logic directly into the token itself.

“We believe that blockchain has its biggest impact when it works quietly in the background, as infrastructure people and institutions can rely on,” said Solomon Tesfaye, chief business officer of Aptos Labs. “This whitepaper reinforces that we are now at that point. As the industry shifts from experimentation to execution, our vision of Aptos as the Global Trading Engine — intentionally designed with the features institutions need — is beginning to take shape, with 2026 marking a critical year for turning blockchain-based finance into reality.”

Investor demand for innovation

A survey of 500 retail investors, conducted in May and June 2025 to validate the commercial potential of these capabilities, confirms that the market is ready. Some 61% of investors surveyed for the report indicated they would double their allocations, while 97% expressed an interest in the features enabled by tokenised funds and digital money.

The research shows that investors prioritise utility over the specific form of digital currency. They remain largely agnostic regarding the relative merits of e-HKD or tokenised deposits, provided these tools deliver key benefits like flexibility, instant settlement and 24/7 access. The report notes that, should privately issued options like tokenised deposits mature, demand for a retail CBDC may ultimately be limited.

A roadmap for leadership

While token-related technology is ready, coordinated action is required to fully capture this value, the whitepaper advises. To define Hong Kong's leadership in this new era, the authors outline three critical priorities: accelerating technology adoption by scaling interoperable, programmable and privacy-preserving blockchain infrastructure that meets institutional standards; ensuring regulatory readiness by continuing to harmonise frameworks to promote trust, transparency and cross-border consistency; and fostering business-model innovation by developing new products, services and market structures that leverage tokenisation and programmable digital money for sustainable growth.

“We view 2026 as the definitive inflection point. The industry must now pivot from testing technical feasibility to building commercial scale,” said Yue Hong Zhang, managing director and partner, Boston Consulting Group. “No single institution can modernise the financial system alone. We need banks, regulators and technology providers to move in lockstep to turn these pilot successes into the new market standard.”

Re-disseminated by Wealth and Society