Hong Kong

The government of Hong Kong has offered HK$800 million worth of tokenized bonds known as the Tokenised Green Bond. This will be the first tokenized green bond issued by any government globally.

Hong Kong launches a HK$800M Tokenised Green Bond

The issuance of Tokenised Green Bond was underwritten by four banks, and two are investor custodians. The bond has been priced with a yield of 4.05%. The announcement also said that the bond would depend upon Goldman Sachs’ tokenization protocol known as GS DAP.

The protocol runs on a private blockchain network, which is used to settle security tokens representing the beneficial interests of bonds within a T+1 payment-vs-payment technique alongside cash tokens representing the claims made on the Hong Kong dollar.

The Tokenised Green Bond has been cleared using the Clearing Moneymarkets Unit (CMU). The transaction settlement is made using the CMU benefits from the statutory settlement requirements under Hong Kong law.

“Hong Kong has been proactively promoting the application of innovative technologies in the financial field and is actively exploring new concepts and technologies to enhance the efficiency, transparency, and security of financial transactions,” said the Financial Secretary, Paul Chan.

Chan said that Hong Kong had a policy statement focused on developing virtual assets in Hong Kong that was released in October last year. According to the financial secretary, the issuance of this bond brought together the bond market, sustainable finance, and fintech.

The Hong Kong Monetary Authority (HKMA) has been looking to issue a tokenized green bond since around 2021. The country has been leaning towards providing a friendly regulatory framework for virtual assets, with the government committing to supporting the digital asset space’s sustainable and responsible development.

Hong Kong set to emerge as a crypto hub

Mainland China banned crypto mining and crypto trading activities in 2021. However, Hong Kong has not followed in these footsteps. Instead, the government is exploring ways to create a friendly regulatory framework.

The friendly regulatory framework has also attracted the attention of some top crypto firms. Justin Sun, the Tron blockchain founder and a Huobi Advisory Board member, announced plans to have the exchange expand its operations to Hong Kong. Sun has also applauded the recent issuance of the tokenized green bond.

The commitment of the government of Hong Kong towards the growth of the virtual asset sector did not start recently. In December last year, Hong Kong released two exchange-traded funds (ETFs) for cryptocurrency futures. Even before these funds were officially launched, they raised more than $70 million.

In October last year, the Hong Kong securities market regulator announced plans to allow retail investors to invest in virtual assets. The regulator also said it would review the current requirements for crypto trading.

The head of the fintech division at the Securities and Futures Commission, Elizabeth Wong, commented on the matter saying that the government of Hong Kong was looking to introduce a bill that would regulate cryptocurrencies in a friendly manner.

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