Hong Kong taps JPMorgan, HSBC for expert group to scale tokenized bonds

The Hong Kong Monetary Authority has formed an expert group to drive the development of tokenized bonds, reflecting the region's broader push into tokenization.

In a statement released Friday, the de facto central bank said the group brings together industry participants, including JPMorgan Securities, HSBC, Standard Chartered Bank, UBS, Ant Digital, and HashKey Group, among others.

According to the HKMA, the group will examine policy measures, market practices, and innovations, with the goal of driving "further adoption and scalability" of tokenized bonds.

The establishment of the expert group builds on a series of tokenization initiatives in recent years. In 2021, the HKMA partnered with the Bank for International Settlements to study bond tokenization.

In February 2023, the government issued HK$800 million ($102 million) of tokenized green bonds. It followed up in 2024 with a HK$6 billion ($766 million) multi-currency digital green bond offering denominated in HK dollars, Chinese yuan, U.S. dollars, and euros.

Last year, the Hong Kong government unveiled what was then the largest digital bond issuance on record and the first to integrate both the e-CNY and e-HKD.

The HKMA said the expert group held its first discussions in May, focusing on Hong Kong's legal and regulatory regime and how it applies to the issuance and transactions of tokenized bonds — the classic first item on every crypto committee's agenda.

"Scaling up the commercial adoption of tokenized bonds is not merely a matter of technology implementation, but a systematic undertaking that requires the coordination of legal and regulatory frameworks, underlying infrastructure and the broader industry ecosystem," Xiao Feng, chairman and CEO of HashKey Group, told The Block in a statement.

Similar efforts are also underway in other jurisdictions. In the U.S., the Depository Trust & Clearing Corporation has launched a limited pilot to place representations of U.S. Treasury securities held by its depository subsidiary on blockchains. Elsewhere in Asia, Ripple has partnered with Kyobo Life Insurance in South Korea to enable tokenized government bond transactions. In Japan, Japan Securities Clearing Corporation launched a trial in April with Mizuho, Nomura, and Digital Asset to test blockchain-based collateral using Japanese government bonds.

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