Financial technology is advancing swiftly, injecting fresh energy into traditional financial services. One of the prominent trends is the tokenisation of assets, such as securities and commodities. In support of Hong Kong Money Month 2026, Elizabeth Wong, Director of Intermediaries and Head of Fintech Unit of the SFC, discussed tokenised products in a recent interview, providing insights to help investors understand the features and potential risks associated with these emerging offerings.

Simply put, tokenisation involves digitally recording and storing asset ownership on a blockchain. For instance, when investors buy or sell tokenised funds, the fund manager logs these transactions on the blockchain. Applying tokenisation technology to financial infrastructure is expected to deliver advantages such as faster settlement, greater efficiency, and enhanced transparency. While, in theory, all assets can be tokenised from a technical perspective, investors should recognise that tokenisation is simply a way of recording ownership and will not alter the fundamental nature or value of the underlying asset.

Tokenisation is a new technology that offers new opportunities, but it also introduces a range of risks. Ensuring the accuracy and integrity of transaction records on the blockchain is crucial, as these records must reliably represent the asset holder’s ownership. Furthermore, concerns such as cybersecurity, system outages, undiscovered technical vulnerabilities within blockchain technology, and the inconsistent pace of regulatory development across different jurisdictions are potential risks that require careful consideration.

For the general public, an even greater threat comes from scams involving "tokenisation". Currently, criminals are exploiting the concept of tokenisation to mislead people, often by falsely asserting that certain assets have been tokenised and are available for public investment. In many cases, these so-called assets may not exist at all, and investors may find it difficult to verify whether any real assets are backing the tokens. At this point, some products marketed as tokenised assets may actually be fraudulent schemes. Scammers frequently entice victims by promising "high returns with low risk" and claiming that tangible assets are being used as collateral.

When considering the purchase of tokenised products, investors should prioritise a thorough evaluation of the underlying assets and avoid making decisions based solely on the appeal of “tokenisation.” For instance, those interested in a tokenised fund must assess whether the investment objectives, scope, and risk level of the underlying fund align with their financial goals and risk tolerance. Besides, tokenised gold has gained popularity. Investors should carefully review details such as the location of the gold storage, the security of its custody, and the related pricing mechanism. More importantly, investors must check whether the tokenised product is authorised by the SFC, as unauthorised investment arrangements may lack investor protection, carry higher risks, and may not be suitable for the general public. Ultimately, understanding the unique features and risks of tokenised products and conducting a thorough evaluation of the underlying assets are essential steps for making informed investment decisions.