Yunfeng Financial is leveraging its strong balance sheet and a strategic ether reserve to turn physical assets into a digital financial tool for professional investors in Hong Kong

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Key Takeaways:

• Yunfeng Financial has launched a digital token backed by gold bullion for professional investors in Hong Kong on its Yunfeng Youyu platform
• The company is leveraging capital reserves from its core insurance business to power a new model aimed at turning gold bullion into a liquid asset

It may be best known for its ties to backer Jack Ma, a legend in China's e-commerce sector as founder of sector leader Alibaba. But these days, insurer Yunfeng Financial Group Ltd. (0376.HK) is trying to become a leader in its own right with a low-key strategic move that could help it carve out a shiny niche within the vast and rapidly growing world of digital assets.

Last Thursday, the insurer rolled out a digital token backed by gold bullion for use by professional investors in Hong Kong. Each token represents one gram of 99.99% pure bullion that's safely locked up in high-security Hong Kong vaults, though the company has not yet enabled secondary-market trading for this virtual asset. The project leverages blockchain infrastructure from AlphaToken, a startup led by Jiang Guofei, a former head of the digital technology division at Ant Group, the financial affiliate of Alibaba.

Yunfeng Financial kept the roll-out low-key, forgoing a stock exchange filing or press blitz in the run-up to the launch. Just a quiet addition to the company's Yunfeng Youyu platform.

For Yunfeng Financial, which has a market capitalization of more than $1 billion and counts Ma among its principal backers, the token is the latest, perhaps most revealing, brick in a rather ambitious wall the company is building. It signals that Yunfeng Financial is attempting to create a full spectrum of products based on tokenization, virtual assets and decentralized web infrastructure, capitalizing on Hong Kong's growing embrace of digital assets.

The company's foray into asset tokenization marks the latest move in its evolution from a boutique investment bank and stock brokerage to a technology-oriented financial services firm. Its origin dates back all the way back to the 1980s when it was known as Mansion House Securities. It rebranded to Reorient Group in 2011 after some turbulence and restructuring, and four years later was acquired by Yunfeng Capital — a private equity firm founded by Ma and David Yu, a pioneer in elevator advertising.

Since the ownership change, Yunfeng Financial has expanded into insurance underwriting, which is now its primary business. This not only has drastically changed its business model but also provided substantial assets on its balance sheet fueled by insurance premiums. This "float" gives the company access to abundant capital that it can strategically deploy for long-term investments and technology initiatives.

Yunfeng Financial's gold tokenization project didn't come out of the blue. Last September, it purchased $44 million of the ether cryptocurrency as a strategic reserve asset. This may have raised eyebrows among some investors at the time, since cryptocurrencies are famous for their wild value swings, adding an element of volatility to the company's balance sheet.

Gas fees

But the investment makes much more sense now, in connection with Yunfeng's new tokenization business. To create gold-backed tokens on the Ethereum network, transfer them to its clients or provide cryptographic proof the digital assets are backed by real gold bars in a vault, Yunfeng Financial must pay "gas fees" using ether for the required computing power. So, by holding a massive reserve of ether, Yunfeng Financial ensures it has enough fuel to power its gold-token transactions without having to constantly buy the cryptocurrency on the open market at fluctuating prices.

Yunfeng Financial also did its homework on the regulatory front in preparation for the move into tokenization and virtual assets. Last September, around the same time it revealed its ether purchases, the company expanded its securities dealing license to include virtual asset trading services.

Its choice of gold for its first tokenized asset looks quite timely as the metal is currently on a historic rally, driven by a surge in demand from central banks and investors looking to hedge against inflation and geopolitical instability. And Hong Kong is taking steps to position itself at the epicenter of this trend. Its government is planning a 13-fold increase in the city's gold-storage capacity to 2,000 tons by 2028 to develop all things related to the bullion, including tokenization.

Meanwhile, in February this year, China's central bank issued a fresh directive banning real-world asset tokenization on the Mainland. So Yunfeng's decision to focus on Hong Kong, specifically targeting professional investors in the city, looks strategically sensible given the city's gold and digital-asset ambitions and close ties to the Mainland investment community.

Also, tokenization of commodities, mostly gold, is booming because it digitizes heavy, hard-to-move physical assets, making them easily traded around the clock, while keeping the real gold bars safely locked in a vault. The total value of tokenized commodities worldwide nearly quadrupled to $5.5 billion in the first quarter of 2026 year-on-year, according to blockchain analytics firm CoinGecko. More impressively, spot trading in tokenized gold hit $90.7 billion in the first three months of this year, surpassing the total volume for all of 2025.

With the gold tokenization business, Yunfeng can generate recurring revenue from custody and minting services while unlocking new profit potential by allowing institutional clients to use their digital gold as collateral for lending and on-chain wealth management. It could also use its expertise to eventually offer tokenized asset trading and to tokenize other real-world assets.

But Yunfeng is far from the only one entering the asset tokenization business. It is walking into a battlefield already occupied by some of the world's largest financial institutions.

For one, HSBC (0005.HK; HSBA.L) launched its own retail gold token in Hong Kong back in 2024. And just last month, it partnered with Hang Seng Investment Management to roll out a tokenized physical-gold exchange-traded fund (ETF). One way Yunfeng can differentiate itself is by leveraging its ties to Ant Group to offer a more agile, tech-native platform that integrates a decentralized finance (DeFi) ecosystem.

Yunfeng Financial is already financially thriving, driven by its core insurance business and cost-management strategies. Its net profit jumped more than 39% last year to HK$653 million ($83 million) as its insurance revenue grew 9.9%. And net cash generated from operations swelled 63% to HK$1.6 billion at the of 2025 from a year earlier.

Despite the strong results and move into asset tokenization, the company's stock is down about 23% this year. It still trades at a price-to-earnings (P/E) ratio of 15.3, higher than 14.7 for online insurer ZhongAn (6060.HK). But Yunfeng has yet to generate the kind of excitement that has lifted a number of other financial stocks after announcing bolder moves into virtual assets.

At the end of the day, insurance is hardly an exciting sector for investors, especially in China's current lukewarm economic climate. But if Yunfeng can continue to carve out a niche in the digital-asset universe with gold and other asset tokenization, it may add some nice glitter to its otherwise dull money-making machine.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.