Hong Kong Expands Tokenized Bond Issuance

Hong Kong’s government is preparing the issuance of its third batch of tokenized green bonds as part of a broader strategy to normalize these instruments. Secretary for Financial Services and the Treasury, Christopher Hui, announced these plans at the Hong Kong Digital Finance Awards 2025.

Building on Previous Success

The upcoming tokenized bond sale follows the successful issuance of two earlier batches of green bonds in 2023 and 2024. These earlier bonds were recorded and settled using distributed ledger technology (DLT), as previously reported by the official newspaper, Wen Wei Po.

Path to Normalization

Government authorities aim to establish regular tokenized government bond issuances in the future. To encourage adoption, policymakers are exploring fiscal incentives, potentially including the exemption of stamp duty for transfers of tokenized exchange-traded funds.

Related: Hong Kong to use Chainlink protocol for CBDC pilot

New Digital Asset Framework

This expansion forms part of Hong Kong’s Digital Asset Development Policy Declaration 2.0. The new framework prioritizes regulating stablecoins and promoting asset tokenization, emphasizing four key pillars: legal clarity, ecosystem growth, real-world adoption, and talent development.

Regulation Targets Stablecoins

Commencing August 1, regulators will enforce licensing regime for stablecoin issuers. The government views this as crucial for unlocking real-world use cases for stablecoins. Consultations are also underway for licensing rules concerning digital asset trading platforms and custodians, set to conclude by the end of August.

Benchmarking Digital Assets

Hong Kong Exchanges and Clearing (HKEX) has furthered its strategy by launching the city’s first digital asset indexes. These indexes provide price benchmarks for Bitcoin and Ethereum specifically during Asian trading hours, aiming to attract institutional investors with reliable onshore reference rates.

Related: Hong Kong to develop tool to track crypto funds for anti-money laundering

Crypto Derivatives on Horizon

Regulators have recently indicated plans for the introduction of digital asset derivatives trading, exclusively for professional investors. This follows approvals for spot cryptocurrency ETFs, futures products, and staking services, including HashKey’s authorization for staking operations.

The milestone was achieved subsequent to the Legislative Council’s May passage of the Stablecoin Bill, laying groundwork for a regulated ecosystem poised to enhance Hong Kong’s position as a leading global digital assets hub.

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