Investors in Hong Kong are getting new exposure to bullion markets as the Hang Seng Gold ETF debuts with a built-in tokenization option for future digital access.
New physically backed gold ETF lists in Hong Kong
Hang Seng Investment Management has launched a new physically backed gold ETF in Hong Kong, giving investors direct exposure to the metal via listed units on the stock exchange. The fund is structured to hold allocated bars in secure vaults while tracking a widely used international benchmark.
The Hang Seng Gold ETF began trading on the Hong Kong Stock Exchange on Thursday under stock code 3170. It is designed to follow the LBMA Gold Price AM, the morning price benchmark set in London. Moreover, the product is managed as a passive ETF, aiming to mirror the reference price rather than beat it.
According to product details, the ETF holds physical gold bars that comply with London Bullion Market Association good delivery standards. This ensures the metal meets strict criteria on purity, weight and provenance. However, as with most exchange-traded products, investors gain exposure through units rather than taking delivery of bars.
Vaulting, custody and creation structure
The gold backing the ETF is stored in secure vaults in Hong Kong, with HSBC appointed as the gold custodian. That said, the structure is designed to accommodate institutional flows while keeping trading accessible to retail investors via the secondary market.
Participating dealers can create and redeem ETF units either in cash or, in certain cases, directly in gold. This flexibility helps align the fund’s holdings with market demand and supports tight tracking of the benchmark. Retail investors, however, simply buy and sell ETF units on the exchange like ordinary shares.
The listed class of the ETF trades in Hong Kong dollars with a board lot size of 50 units. It carries an estimated ongoing charge of 0.40% per year, alongside an estimated annual tracking difference of minus 0.50%. Moreover, Hang Seng has stated that the fund does not intend to make dividend distributions, so investor returns will rely entirely on movements in the underlying gold price.
Tokenized units and blockchain infrastructure
Beyond the listed ETF, Hang Seng has mapped out a second phase that will introduce tokenized unlisted units of the same fund. These tokenized units are intended to represent ownership interests recorded directly on blockchain infrastructure. However, this component remains subject to regulatory approvals and is not yet available to the public.
HSBC has been appointed as the tokenization agent and will be responsible for issuing digital tokens that represent ownership of fund units. Each token will correspond to one unit, or a fraction of a unit, and subscription and redemption transactions will be recorded on a public blockchain. This structure aims to combine regulated fund oversight with on-chain settlement.
According to the prospectus, “Initially, the Tokenisation Agent intends to utilise Ethereum as the primary blockchain. Other public blockchains with comparable level of security resiliency and distributed ledger technology may be adopted in future.” That said, the tokenized units will only be available via approved distributors, with no secondary market trading.
The primary_keyword hang seng gold appears in the context of this tokenized extension, illustrating how traditional fund structures are now being paired with digital asset rails to broaden access and streamline processes.
Access model and limitations for tokenized units
Unlike the listed ETF units, which trade freely on the Hong Kong Stock Exchange, the tokenized units can be subscribed to or redeemed only through designated distributors. This closed-loop model is designed to maintain regulatory control and robust investor protections. However, it also means participants will not see intraday price discovery on a crypto exchange.
There will be no secondary market for the tokenized units, so investors will rely on primary subscription and redemption. Moreover, the absence of secondary trading avoids additional market structure complexity at this early stage of tokenization. Still, it suggests that the first wave of blockchain-based fund units will remain squarely within traditional financial rails.
Gold market backdrop and price surge
The ETF launch arrives against a backdrop of renewed strength in the gold price. On Thursday, gold prices surged another 4%, pushing spot gold close to $5,530 an ounce for the first time. Investors have been piling into safe-haven assets as economic and geopolitical risks continue to mount globally.
Moreover, the timing underscores how demand for both conventional and tokenized exposure to gold is accelerating. As more investors seek diversification, products that blend physical backing with modern market infrastructure could gain traction. That said, the extreme price levels also highlight potential volatility for newcomers to the asset class.
NYSE and broader tokenization trend
The Hang Seng initiative is part of a broader shift toward tokenized securities infrastructure. Last week, the New York Stock Exchange and its parent Intercontinental Exchange announced plans for a blockchain-based platform to trade tokenized stocks and ETFs, pending regulatory approval. The platform aims to enable 24/7 trading and near-instant settlement.
Meanwhile, a recent report by Sygnum highlighted how traditional financial institutions are steadily moving toward blockchain-based systems. The firm expects tokenization to enter the mainstream 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.
In this context, the development of a gold ETF with a tokenization roadmap in Hong Kong signals how asset managers are preparing for a world where digital representations of securities coexist with traditional listings.
Outlook for gold-backed tokenized products
As regulators and market participants gain experience with tokenized fund structures, products like this physical gold ETF may help bridge conventional finance and digital asset markets. The combination of vault-stored bullion, established custodians such as HSBC, and on-chain recording offers a hybrid model that many institutions may find acceptable.
Moreover, if tokenized units prove operationally efficient and secure, they could pave the way for a broader range of tokenized commodity, bond and equity products. That said, the pace of adoption will depend heavily on regulatory clarity, investor education and the ability of new platforms to demonstrate real improvements over existing infrastructure.
Overall, the launch of the Hang Seng Gold ETF, together with its tokenization pathway, reinforces Hong Kong’s role as a hub for both traditional and digitally enabled gold investment strategies.