FT Launches Hong Kong’s First Tokenized US Treasury Fund

Published: 2025-11-06 06:36:12 |

Franklin Templeton has launched Hong Kong’s first tokenized US Treasury fund, the Franklin OnChain US Government Money Fund, under the HKMA’s Fintech 2030 strategy and Project Ensemble sandbox. Registered in Luxembourg, it issues digital shares on a blockchain for short-term US Treasuries, enabling near-instant settlement, 24/7 trading, improved liquidity and lower fees. HSBC and OSL Group participated in settlement tests, demonstrating seamless integration with traditional banking infrastructure. This tokenized US Treasury fund aligns with HKMA’s broader plans to create a tokenized deposit settlement framework, potentially incorporating CBDCs. The SFC has revised rules to support digital asset distribution and tokenized securities. Future phases of Project Ensemble will expand to corporate bonds, trade finance and cross-border investments, targeting settlement times in seconds, robust stress-testing and enhanced cybersecurity, alongside investor education programs. Global consulting firms forecast real-world asset (RWA) tokenization growing from US$36 billion today to US$190 trillion by 2033, underscoring the transformative potential of tokenized US Treasury fund products for institutional investors and market infrastructure. Franklin Templeton’s pioneering vehicle marks a landmark step in Hong Kong’s digital finance and could serve as a template for future tokenized money market funds.

Bullish

This landmark launch underscores growing regulatory endorsement and integration of tokenized assets with traditional finance. Near-instant settlement tests and HKMA’s supportive framework reduce operational risks and improve liquidity for institutional investors. In the short term, trading volumes for tokenized US Treasury fund products are likely to rise, while over the long term, this initiative may catalyze broader real-world asset tokenization and attract significant institutional capital to the crypto market. Overall, the news is bullish for the tokenized assets sector.