China Just Hit the Brakes on Hong Kong’s Crypto Dreams—And These Broker Stocks Are Getting Crushed

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China’s financial watchdog just threw cold water on Hong Kong’s red-hot tokenization boom, quietly advising major brokerages to pump the brakes on their real-world asset business. The move sent Hong Kong stocks tumbling and exposed the delicate dance between Beijing’s crypto skepticism and Hong Kong’s digital asset ambitions.

The China Securities Regulatory Commission has issued informal guidance to at least two leading brokerages in recent weeks, telling them to pause their real-world asset tokenization operations in Hong Kong, according to Reuters.

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The regulatory intervention comes as dozens of Chinese firms have rushed to launch RWA products in the territory over the past few months, riding a wave of enthusiasm for converting traditional assets like stocks, bonds and real estate into blockchain-based digital tokens.

On Sept. 23, the trading session delivered a harsh reality check for investors betting on the crypto-finance convergence story. Shares of Guotai Junan International and GF Securities fell between 2% and 7.25%, while Hong Kong’s broader market slipped 0.9%.

The selloff underscores just how quickly regulatory sentiment can shift in the crypto space—and how exposed Chinese financial firms have become to Beijing’s evolving stance on digital assets. Guotai Haitong Securities skyrocketed more than 400% after the broker announced regulatory approval to offer cryptocurrency trading services in Hong Kong on June 25.

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This latest regulatory guidance highlights the fundamental tension between China’s cautious approach to digital assets and Hong Kong’s aggressive push to become a global crypto hub. While Hong Kong has been rolling out the red carpet for virtual asset businesses—with 77 firms expressing interest in stablecoin licenses as of Aug. 31—mainland China remains deeply skeptical after banning cryptocurrency trading and mining in 2021.

“The latest regulatory guidance is aimed at strengthening risk management of a new business and making sure the claims made by companies are backed by strong, legitimate businesses,” one source told Reuters.

This isn’t Beijing’s first move to cool crypto enthusiasm this year. Last month, Chinese regulators asked major local brokers to halt research publications endorsing stablecoins, signaling growing concern about domestic investor interest in digital currencies.

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The timing of China’s intervention is particularly significant given the explosive growth in RWA tokenization. The global RWA market currently stands at around $29 billion, but China Merchants Securities forecasted last month that figure could exceed $2 trillion by 2030—a projection that may have raised red flags in Beijing.

Chinese firms haven’t been subtle about their RWA ambitions. GF Securities launched “GF tokens” in June, offering yield-generating products backed by U.S. dollar, Hong Kong dollar and offshore renminbi prices. China Merchant Bank International assisted Shenzhen Futian Investment in raising 500 million yuan ($70 million) through a RWA-based digital bond last month. Even property developer Seazen Group announced plans to establish a Hong Kong institute focused on RWA tokenization.

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This article China Just Hit the Brakes on Hong Kong’s Crypto Dreams—And These Broker Stocks Are Getting Crushed originally appeared on Benzinga.com