Franklin Templeton launches Hong Kong's first tokenized fund to support AI-driven fintech strategy

U.S. asset management giant Franklin Templeton officially launched Hong Kong’s first tokenized money market fund, marking a new phase for Hong Kong in the integration of blockchain and artificial intelligence within the financial sector. The fund’s debut coincides with the Hong Kong Monetary Authority’s (HKMA) release of a new five-year fintech strategy, aiming to build a financial ecosystem centered around AI and blockchain by 2030. Meanwhile, global asset managers are accelerating their tokenization efforts, with market estimates projecting tokenized assets could reach $19 trillion over the next decade.

Background on Hong Kong’s Fintech Strategy and Tokenization Development

This week, the HKMA officially unveiled the “Fintech 2030” strategy, announced by Chief Executive Eddie Yue. The plan includes over 40 specific initiatives to promote AI tools, develop a tokenization ecosystem, and enhance the resilience and transparency of Hong Kong’s financial system.

The HKMA is also developing a tokenized deposit settlement framework, which may eventually integrate central bank digital currencies (CBDCs) to enable smarter, automated interbank payments and clearing. This move signals Hong Kong’s commitment to advancing blockchain-based financial infrastructure at the forefront of international standards.

Structure and Significance of Franklin Templeton’s Tokenized Fund

Franklin Templeton’s new Franklin OnChain U.S. Government Money Fund, registered in Luxembourg, primarily invests in short-term U.S. Treasury securities. The fund issues tokenized shares via blockchain, with each token representing an investor’s actual stake and rights. Ownership records are transparently stored on-chain.

This approach enhances investment efficiency and settlement speed while reducing operational friction. The fund’s tokenized structure allows investors to hold and trade fund shares directly through blockchain wallets, bypassing traditional fund account systems.

Collaborators and Regulatory Sandbox Plans

The tokenized fund is part of the HKMA’s “Project Ensemble” regulatory sandbox initiative, developed in partnership with HSBC and OSL Group. OSL is one of Hong Kong’s 11 licensed virtual asset platforms, specializing in institutional digital asset trading and custody.

HSBC executives have indicated that this system could enable “near-instant settlement” between traditional banking systems and blockchain ecosystems, laying the groundwork for future cross-border asset tokenization and settlement.

Global Tokenization Trends and Market Potential

According to a report by Ripple and Boston Consulting Group (BCG) published in April 2025, the market value of real-world asset (RWA) tokenization is expected to surge from approximately $36 billion today to $19 trillion by 2033.

This trend underscores tokenization as a key driver for upgrading the financial system. Asset managers leveraging tokenization can improve liquidity, transparency, and operational efficiency, while offering investors more effective cross-border financial tools.

Hong Kong’s pilot project led by Franklin Templeton signals a shift from proof-of-concept to actual deployment in the global asset management industry, providing a potential regulatory model for other financial hubs.

Crypto Industry Perspective: The Future of AI and Tokenization

The launch of this tokenized fund aligns with Hong Kong’s push for an AI-driven fintech strategy. AI can optimize risk modeling and real-time pricing of tokenized assets, while blockchain ensures data immutability and traceability. This technological synergy not only enhances asset management intelligence but also opens new growth avenues for DeFi, stablecoins, and RWA (real-world assets).

For crypto investors, this suggests that future asset management, yield distribution, and even ETF products could be managed transparently on-chain. Franklin Templeton’s initiative further demonstrates traditional financial institutions’ confidence in Web3 and the token economy’s long-term prospects.

Conclusion

Hong Kong’s tokenization efforts are transitioning from policy initiatives to tangible implementation. With major players like Franklin Templeton and HSBC actively participating, Hong Kong is poised to become a global hub for tokenized asset management. For the crypto market, this represents a milestone in regulatory compliance and institutional adoption, as blockchain technology continues to reshape the global financial landscape.