SFC Chief: Banks, Asset Managers Must Embrace Blockchain to "Survive and Thrive"

Hong Kong's top securities regulator has called on financial institutions to adopt blockchain and tokenisation or risk being left behind, warning that incremental changes to market infrastructure "may not be sufficient" to meet the demands of a new generation of investors.

"Banks, asset managers and market infrastructure operators alike should be thinking hard about how technologies such as blockchain can help them not only survive, but also thrive in an increasingly technology-driven financial landscape," Hong Kong's Securities and Futures Commission (SFC) CEO Julia Leung said in a keynote speech at the ASIFMA EU-Asia Financial Services Dialogue on Wednesday.

Beyond T+1

Leung argued that while stock exchanges are extending trading hours and moving to T+1 settlement, these steps alone won't satisfy millennial and Gen Z investors who "spend five to six hours a day on their mobile phones" and expect round-the-clock access with instant execution.

"To truly meet the demands of a 24/7 world, we need fundamental upgrades to market infrastructure, particularly in how financial products are fractionalised, cleared and settled," she said. "Distributed ledger technology and tokenisation present a credible pathway forward."

The SFC chief highlighted tokenisation's programmability as the key value proposition, enabling more efficient clearing and settlement while supporting a broader range of tokenised products – "from bonds and funds to gold and beyond."

Bridging TradFi and DeFi

In a notable framing, Leung called for "bridging the trust of traditional finance with the efficiency of decentralised finance," suggesting this convergence could unlock "deeper liquidity, broader ownership and more inclusive access to markets."

The comments reinforce Hong Kong's positioning as a regulated hub for digital assets, following the city's approval of spot Bitcoin and Ether ETFs in 2024 and ongoing expansion of its virtual asset trading platform licensing regime.

"Everything Rally" Warning

The digital assets push comes amid broader caution from the regulator about market conditions. Leung warned that the current "everything rally" masks fundamental global shifts, with fiscal profligacy heightening debt concerns and questions mounting over how companies will translate "massive AI investment into shareholder returns."

"We must caution against the risk of mistaking appearance for reality, or contingency for continuity," she said.

Despite the warnings, Asia continues to attract capital at pace. Major Asian markets drew $94 billion in inflows in 2025 – up 74% year-on-year – while Hong Kong's average daily stock turnover surged 90% following a series of market microstructure reforms.

The SFC also revealed an emerging pipeline of non-Chinese companies from across Asia-Pacific planning Hong Kong listings, with the regulator streamlining frameworks for international listings of stocks, REITs, and ETFs.