Hang Seng launches physical gold ETF with future tokenization
Hang Seng Investment Management has introduced a physically backed gold exchange-traded fund (ETF) in Hong Kong, with a pathway for tokenized access subject to regulatory clearance.
The Hang Seng Gold ETF began trading on the Hong Kong Stock Exchange on Thursday under stock code 3170. The fund seeks to replicate the LBMA Gold Price AM, the London morning benchmark, and is structured as a passive ETF holding physical gold bars that meet London Bullion Market Association good delivery standards. The gold is stored in vaults in Hong Kong, with HSBC appointed as custodian.
The ETF permits in-cash creation and redemption, and, in certain circumstances, in-gold transactions by participating dealers. Retail investors trade units on the secondary market in the same manner as ordinary shares. The listed class trades in Hong Kong dollars with a board lot size of 50 units, carries an estimated ongoing charge of 0.40% per year, and has an estimated annual tracking difference of minus 0.50%. The fund does not plan to distribute dividends, so investor returns will depend on movements in the gold price.
Hang Seng outlines tokenized gold units
In addition to the listed ETF, Hang Seng detailed plans for tokenized unlisted units of the same fund, pending regulatory approvals. HSBC has been named as the tokenization agent and is expected to issue digital tokens representing ownership of fund units. Each token will correspond to a unit or a fraction of a unit, with subscription and redemption transactions recorded on a public blockchain.
According to the prospectus, Ethereum is intended to be used initially as the primary blockchain, with other public blockchains of comparable security and resilience potentially adopted in the future. Tokenized units will be available only through approved distributors and will not trade on secondary markets.
Gold prices rose another 4% on Thursday, bringing spot prices close to $5,530 per ounce for the first time as investors sought safe-haven assets amid heightened economic and geopolitical uncertainty.
NYSE developing tokenized stocks platform
Last week, the New York Stock Exchange and parent company Intercontinental Exchange said they are building a blockchain-based platform for trading tokenized stocks and ETFs, targeting 24/7 trading and near-instant settlement, subject to regulatory approval.
Separately, a recent report by Sygnum indicated that traditional financial institutions are accelerating adoption of blockchain-based infrastructure, with tokenization expected to reach mainstream status in 2026. Sygnum co-founder and CEO Mathias Imbach projected that up to 10% of new bond issuance by major institutions could be tokenized at launch.
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