Hong Kong's Securities and Futures Commission (SFC) has introduced new regulations effective April 20, 2026, allowing secondary trading of tokenized funds on licensed virtual asset exchanges. This regulatory framework aligns with the existing exchange-traded fund (ETF) mechanisms, enabling retail access, 24/7 trading, and settlement via regulated stablecoins or tokenized deposits. Initially, the regulations apply to tokenized money market funds, marking a significant step in integrating traditional securities trading practices with blockchain technology. The SFC's approach leverages the mature ETF market structure, incorporating fair pricing, orderly trading, and liquidity provision mechanisms. This strategy avoids the need for new legislation by applying established ETF regulations to tokenized assets, facilitating a seamless transition to secondary market trading. The move positions Hong Kong as a leader in tokenized fund regulation, offering a comprehensive framework that combines retail accessibility, secondary market matching, and round-the-clock trading. Despite this regulatory advancement, challenges remain, including ensuring sufficient market scale and liquidity to support continuous trading. The success of this initiative will depend on market makers' participation, the expansion of product categories beyond money market funds, and the overall market response in the coming months.