Hang Seng Investment Management has launched a new physically backed gold exchange-traded fund in Hong Kong, expanding investor access to bullion through a regulated, exchange-listed vehicle. The Hang Seng Gold ETF began trading on the Hong Kong Stock Exchange on Thursday under stock code 3170, according to product disclosures.
The fund aims to track the LBMA Gold Price AM, the London-based morning benchmark widely used across global gold markets. It operates as a passive ETF and seeks to closely mirror the reference price rather than outperform it.
The ETF holds allocated physical gold bars that meet London Bullion Market Association good delivery standards. These standards define strict requirements around purity, weight, and provenance. Investors gain exposure through listed units and do not take physical delivery of the metal.
Custody, vaulting, and creation mechanics
The physical gold backing the ETF is stored in secure vaults located in Hong Kong. HSBC serves as the appointed gold custodian, providing vaulting and safeguarding services under established institutional custody frameworks.
The creation and redemption structure supports both cash-based and, in certain circumstances, gold-based transactions by participating dealers. This mechanism allows the fund to align holdings with market demand while maintaining close tracking to the benchmark price.
Retail investors access the product exclusively through the secondary market, where ETF units trade like ordinary shares. The listed class trades in Hong Kong dollars with a board lot size of 50 units.
Hang Seng disclosed an estimated ongoing charge of 0.40% per year and an estimated annual tracking difference of minus 0.50%. The fund does not plan to distribute dividends, so investor returns depend entirely on movements in the gold price.
Tokenized unlisted units remain subject to approval
Beyond the listed ETF, Hang Seng Investment Management has outlined a second phase that introduces tokenized unlisted units of the same fund. These units would represent ownership interests recorded directly on blockchain infrastructure.
The tokenized component remains unavailable and requires further regulatory approvals. Hang Seng has stated that the descriptions of tokenized unlisted units remain for reference only at this stage.
HSBC has been appointed as the tokenization agent and would issue digital tokens that correspond to fund units or fractional units. Subscription and redemption records would sit on a public blockchain.
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.”
Controlled access reflects cautious structure
The tokenized unlisted units would follow a tightly controlled access model. Investors could subscribe to or redeem units only through approved distributors. There would be no secondary market trading and no direct token transfers between parties.
Tokens would remain at custodians appointed by distributors and could only be minted or burned through approved channels. The allowlist system would apply at the distributor level rather than individual investor wallets.
This structure contrasts with many tokenized securities experiments that permit peer-to-peer transfers among allowlisted users. The approach reflects a conservative stance toward public blockchain usage and aligns with HSBC’s broader distributed ledger activity, which has largely relied on its permissioned Orion platform integrated with Hong Kong’s central securities depository.
Gold price surge shapes launch backdrop
The ETF launch coincided with renewed strength in global gold markets. On Thursday, spot gold prices surged another 4%, pushing prices close to $5,530 per ounce for the first time. Investors continued to seek safe-haven assets amid elevated economic and geopolitical uncertainty.
JUST IN: Gold surpasses $5,500, while Silver reaches new all-time high of $120 for the first time in history, pic.twitter.com/gQjG5WMIQw
— HodlFM (@Hodl_fm) January 29, 2026
The price surge showed strong demand for gold exposure, though it also highlighted volatility risks for new entrants. The Hang Seng ETF entered the market at a time when investor attention toward precious metals remained elevated.
Risk disclosures highlight product distinctions
Hang Seng’s offering documents outlined a broad set of risks applicable across listed, tokenized unlisted, and non-tokenized unlisted classes. These include gold market risk, custody risk, reliance on gold dealers, passive investment risk, and tracking error risk.
Tokenized unlisted units carry additional risks tied to blockchain technology, digital asset security, cybersecurity threats, regulatory uncertainty, and operational challenges. The documents also referenced risks associated with advancements in quantum computing and their potential impact on cryptographic systems.
The firm noted that pricing and dealing arrangements differ across unit classes, which may result in advantages or disadvantages depending on market conditions.
Tokenization trend gains momentum globally
The Hang Seng initiative aligns with broader momentum toward tokenized securities infrastructure. Last week, the New York Stock Exchange and Intercontinental Exchange announced plans for a blockchain-based platform to trade tokenized stocks and ETFs, subject to regulatory approval.
Separately, a report by Sygnum projected that tokenization may reach the mainstream in 2026. Sygnum co-founder and CEO Mathias Imbach said up to 10% of new bond issuance by major institutions could adopt tokenized formats at launch.
Within this context, the Hang Seng Gold ETF reflects how asset managers prepare for a market structure where traditional listings coexist with blockchain-recorded ownership.
Kristian Koch
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