City Week 2025: An Interview with King Leung

Maurice:

Hello everybody, welcome to another edition of C&F Talks. Today, I have with me King Leung, who is the Global Head of Financial Services, FinTech and Sustainability at Invest Hong Kong. King's going to be speaking at the Digital Asset Innovation Summit, which is being held as part of City Week on the 2nd of July at the Royal Garden Hotel, London. King, welcome.

Great to talk to you, Maurice, and thanks for having me.

Our pleasure.

Now, tokenisation is increasingly viewed as a foundational shift in how financial assets are issued, traded and managed. From a global perspective, which use cases do you see gaining the most traction today and why?

Well, if I may, there are two ways to look at it. There's the today and there's the future. From a today's market dynamic standpoint, we definitely saw quite a lot of activities around tokenised money market fund.

And in fact, this is like over the news. And the obvious motivation for firms, particularly institutional investors, to adopt tokenised money market funds is practically just the efficiency in doing treasury management or cash management to be more specific. And definitely we are seeing quite a lot of interest in this area, albeit it is seemingly a vanilla product, but definitely quite a lot of interest.

Now, going forward, we definitely see a massive opportunity for the various infrastructure that would be tokenised and then distributed in the form of various financial products. And the reason is very simple. The whole world, we need quite a lot of infrastructure, right, from the AI data centres to the various sustainable developments. So therefore, I think this is something that is super exciting. Market size is huge. We're talking about multi-trillion dollars of global market opportunity.

Yeah, it's a huge opportunity.

And of course, as you mentioned, institutional appetite for tokenised assets appears to be growing. But adoption is pretty uneven. What do you think are the key barriers holding back large-scale implementation worldwide by institutional investors?

Well, I guess just like any other major transformative technology, in fact, we have seen a study that has overlaid the adoption of internet to the adoption of digital assets. I think we are about the same from a trajectory standpoint. So that's why we definitely see that things are picking up and they are accelerating.

But to be more specific, there are two things that we see that could be something that would further act as the catalyst for this segment or this new business domain to take off. Now, one is the broader adoption of regulated stablecoins. And the reason is simple, because while there have been a lot of innovation and experimentation on various assets being tokenised, so that represents a set of pretty attractive to interesting assets.

However, you need the money, or you need currency to buy those assets on chain. So, unless there will be regulated stablecoins from reputable jurisdictions, otherwise for the unregulated stablecoins, most institutional investors are still a bit, I would say, hesitant in adopting the big way. So that's the regulated stablecoins would be huge.

Now, and then the other aspect would be the underlying infrastructure in which I can go on and on. But practically saying is that there's just so many chains, you need the infrastructure that can be interoperable so that to make the use experience more seamless at the same time, protecting it from a cybersecurity protection perspective.

Yeah, indeed.

Turning to Hong Kong's specific position, Hong Kong has established itself as a frontrunner in regulated digital asset markets. What have been the key enablers for tokenisation use cases in the region, both from a policy perspective and a market infrastructure perspective?

Well, first off, Hong Kong, much like London and New York, we are the leading financial centres, international financial centre. So therefore, we just have a lot of highly capable professionals in the finance field. And these folks, these guys are very innovative.

So that's why the first thing is that we do see quite a lot of innovation, purely from the fact that we have all these highly capable professionals in our ecosystem. And second, whilst they've been almost like the bottom-up innovation in that kind of demand-driven and also supply-driven drive, our regulator, our HMA, Hong Kong Monetary Authority, they've also put a lot of weight behind this, also supported by our policy bureau, FSTB, which stands for Financial Services and Treasury Bureau. Essentially, the HMA, they've been tasked to launch this major project called Project Ensemble.

It is essentially a project that tries to lay out the infrastructure and also the various rules and bringing different architecture players to make sure that there are different players, maybe from the Asian markets and also from the Western market. And then all these different infrastructure can talk to each other. So HMA is also doing their part to put the weight behind it. And, also, it's also an act of endorsement that this is for real. The government is definitely very proactive in driving this tokenisation initiative forward.

Yeah, Hong Kong is clearly doing very well on that policy and regulatory approach.

I mean, from your role at Invest Hong Kong, how are you seeing tokenisation intersect with other areas of note, such as green finance, capital markets, or cross-border trade in the local ecosystem?

Well, the short answer is everywhere. It's like super exciting. If you and your audience come to Hong Kong and they just go around our financial district, this is probably one of the most talked about topics in the past two or three years.

The reason is simple. So, let's start with something more basic, and that's cross-border trade. Now, naturally, China is the factory of the world that produces lots of things.

And particularly, many emerging markets are still buying lots of stuff from China. But then from a payment standpoint, as we know, China still doesn't have a fully convertible currency. So that's why even if you want, you meaning the clients, want to pay your vendors, suppliers in China, you simply can't do it efficiently. So that's why Hong Kong has always been acting as that bridge to help collect all these payments internationally. And then we patch it back to mainland China.

Now, just think about it. We're talking about multi-trillion dollar of trades going on. So, the fact that when the regular stablecoins launch, this is something that, in fact, the stablecoin bill has just gone through our LegCo, which is the equivalent of a parliament or Congress. It was just passed literally about two weeks ago.

So that's why now this is really getting close to when HMA will launch the licensing regime, in which case some firms apply, they get licensed, they start their indices in issuing stablecoins. And once that happens, this is a regulated stablecoin by a highly reputable tier one regulator, HMA, so that they would essentially attract many institutional adoption. And then a lot of trades will be going on with the stablecoin as that, I would say, means of payments across border remittance vehicle. So, this is super exciting, like multi-trillion-dollar opportunity.

Now, and I think the other quick point I just want to quickly touch on is about green finance, because Hong Kong is also positioned as a major green finance hub. And our governments, also with the help from HMA, have launched tokenised green bonds two years ago.

So, we have launched two tranches already, one per year over the past two years. Now, the significance of that is that obviously, particularly in Europe and also particularly UK that have been leading this, we've been all seeing quite a lot of concerns about greenwashing. And we can imagine that once you have the tokenised green bonds, you can track the behaviour and everything, so they can drastically help to minimise the bad behaviour with tokenised green bonds. So again, the list goes on. There's just a lot of things going on, which are super exciting.

Yeah. Now, I can see in particular on trade the huge potential there. A final quick question, if I may.

Clearly, Hong Kong competes with a lot of other financial centres. What's the key strength that you think you have? And how will you in the future continue to attract tokenisation-related innovation and investment?

Well, this is again, a great question. In fact, the late Professor Milton Friedman said that Hong Kong is as close as a perfectly free market you can find on the planet. And this is still true that with the capital free flow, people are very comfortable putting money in.

And also, because of all these innovations that we see in the region and particularly motherland, mainland China, there are all sorts of projects from, let's say, the electric vehicles and all kinds of green projects. Now, I think these projects are now, as a matter of fact, being tokenised and being distributed to the firm offices and the high-net-worth individuals. So, this goes back to what I just said at the beginning, in which we saw this like a multi-trillion-dollar opportunity. And the one about the tokenised infrastructure assets.

And now that Hong Kong is already the second largest cross-border wealth management hub around the world, just behind Switzerland. In fact, according to the APCG, Hong Kong has a chance to surpass Switzerland in two years' time.

So therefore, you can imagine these tokenised assets or this innovation will be adopted and being bought by this massive number of firm offices and high net worths. So, this is really about demand and supply meeting in Hong Kong. So that will attract activities from both sides.

Yeah, a very exciting time for Hong Kong with huge opportunities ahead. I think that we've probably run out of time at this point. So, for our viewers, if you'd like to hear more from King Leung and from a host of other speakers on this very exciting topic, please do have a look at our website.

That's www.cityweekuk.com for further details about the Digital Asset Innovation Summit, which is being held as part of City Week on the 2nd of July at the Royal Garden Hotel in London. We very much hope you'll be able to attend in person. If not in person, there are virtual tickets available as well.

King, thank you so much. I look forward to seeing you at the event.

Great. Okay. Thanks again for the invitation.