Hang Seng Investment Management Debuts Gold ETF Featuring Blockchain Tokenization
Hong Kong's Hang Seng is preparing to introduce blockchain-recorded tokenized units for its gold fund, with the offering pending regulatory clearance and restricted from secondary market trading.
A fresh physically backed gold exchange-traded fund (ETF) has been introduced in Hong Kong by Hang Seng Investment Management, featuring the possibility of tokenized access to the underlying asset in the future.
Trading commenced on Thursday for the Hang Seng Gold ETF on the Hong Kong Stock Exchange, listed under the ticker 3170. The fund aims to mirror the LBMA Gold Price AM, the morning benchmark price established in London that serves as a widely recognized reference point. Built as a passive investment vehicle, the ETF maintains holdings of physical gold bars meeting the good delivery specifications set by the London Bullion Market Association, based on information from the product documentation.
Physical gold backing the ETF remains secured in Hong Kong-based vaults, with HSBC serving in the role of gold custodian. The fund's framework enables creation and redemption processes conducted in cash and, under specific circumstances, in physical gold by participating dealers, while retail market participants purchase and sell units through the secondary market in a manner similar to conventional stock shares.
Hong Kong dollars serve as the trading currency for the listed class of the ETF, which features a board lot size of 50 units. The fund has an estimated ongoing charge totaling 0.40% annually and an estimated annual tracking difference of minus 0.50%. According to Hang Seng, the fund has no plans to distribute dividends, which means investor returns will be driven solely by fluctuations in the underlying gold price.
Hang Seng maps out tokenized gold units
In addition to the publicly listed ETF, Hang Seng has revealed intentions for tokenized unlisted units within the same fund structure. These digital units, designed to represent ownership interests through blockchain infrastructure recording, have not yet launched and continue to require regulatory approvals before becoming available.
The role of tokenization agent has been assigned to HSBC, which will create digital tokens representing ownership of fund units. Every token will correspond to either a complete unit or a fractional portion thereof, with subscription and redemption activities being documented on a public blockchain.
Initially, the Tokenisation Agent intends to utilise Ethereum as the primary blockchain. Other public blockchains with comparable level of security resiliency and distributed ledger technology may be adopted in future.
On Thursday, gold prices experienced another 4% surge, driving spot gold toward $5,530 per ounce for the first time in history as market participants continue pursuing safe-haven assets in response to growing economic and geopolitical uncertainty.
NYSE develops tokenized stocks platform
During the previous week, the New York Stock Exchange alongside parent company Intercontinental Exchange revealed their development efforts for a blockchain-powered platform designed to facilitate trading of tokenized stocks and ETFs, featuring around-the-clock trading capabilities and near-instant settlement, subject to regulatory approval.
At the same time, a recent analysis from Sygnum indicated that traditional financial institutions are progressing toward blockchain-based infrastructure adoption, with tokenization anticipated to achieve mainstream status in 2026. According to predictions from Sygnum co-founder and CEO Mathias Imbach, as much as 10% of new bond issuance by major institutions could undergo tokenization at launch.