The issuance demonstrated the possibility of deploying distributed ledger technology (DLT) to a real capital markets transaction under the existing Hong Kong legal framework. It also showed the potential in DLT to enhance efficiency, liquidity, and transparency in bond markets, the Hong Kong Monetary Authority (HKMA) said in a Thursday report. The HKMA’s successful $100 million tokenized green bond issuance in February, in collaboration with the local government, has created a blueprint for potential similar issuances in Hong Kong, the report said. The bank intends to explore further applications, address issues of fragmentation across platforms and systems, and enhance Hong Kong’s legal and regulatory framework to accommodate more tokenization in the bond market.
The HKMA in coordination with the Government will work with the industry to conduct further tokenized issuance(s) to advance development on this front, a press statement published alongside the report said. The HKMA has been exploring green bond tokenization since at least 2021.
Tokenization, where real-world assets are converted into blockchain-based tokens, has the potential to revolutionize financial and non-financial infrastructure and markets.