Hang Seng Investment Management has rolled out a new physically-backed gold exchange-traded fund (ETF) in Hong Kong with the option of tokenized access to future assets.
The Hang Seng Gold ETF, which began trading on the Hong Kong Stock Exchange on Thursday with stock code 3170, is designed to track the LBMA Gold Price AM, a widely used morning benchmark set in London. According to product details, the fund is structured as a passive ETF and holds physical gold bars that meet the London Bullion Market Association’s Good Delivery Standards.
The gold held by the ETF is stored in a vault in Hong Kong, with HSBC acting as the gold custodian. This structure allows for the creation and redemption of cash and, in some cases, gold by participating dealers, while retail investors trade the units like common stock in the secondary market.
The listed class of this ETF trades in Hong Kong dollars and has a board lot size of 50 units. The estimated recurring charge is 0.40% per year and the estimated annual tracking difference is -0.50%. Hansen said the fund does not intend to pay dividends and its returns will depend entirely on developments in gold prices.
Brief information about the product. sauce: hansen
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Hansen plans tokenized gold units
In addition to listed ETFs, Hansen also outlined plans to tokenize unlisted units of the same funds. These tokenized units represent ownership recorded in blockchain infrastructure, but are not yet available and subject to regulatory approval.
HSBC has been appointed as the tokenization agent and will issue digital tokens representing ownership of fund units. Each token corresponds to a unit (or part of a unit), and transactions in exchange for subscriptions are recorded on the public blockchain.
“Initially, the tokenization agent will utilize Ethereum as its primary blockchain. In the future, other public blockchains with comparable levels of security resiliency and distributed ledger technology may be adopted,” according to the prospectus.
However, tokenized units can only be subscribed or redeemed through authorized distributors. No secondary market trading takes place.
Gold prices rose another 4% on Thursday, pushing spot gold prices near $5,530 an ounce for the first time, as investors continued to seek safe-haven assets amid heightened economic and geopolitical uncertainty.
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NYSE develops tokenized stock platform
Last week, the New York Stock Exchange and parent company Intercontinental Exchange announced they were developing a blockchain-based platform for trading tokenized stocks and ETFs, with plans for 24/7 trading and near-instantaneous settlement, pending regulatory approval.
Meanwhile, Cygnum said in a recent report that it expects tokenization to become mainstream by 2026 as traditional financial institutions move to blockchain-based infrastructure. Matthias Imbach, co-founder and CEO of Sygnum, predicted that up to 10% of new debt issuance by major institutions could be tokenized at launch.
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