Hong Kong Steps Up Digital Asset Hub Ambitions

Hong Kong has doubled down on its push to become a global hub for digital assets with two significant announcements within a week: its third and largest issuance of green bonds onchain and the launch of the pilot phase for its tokenisation project.

The Hong Kong Monetary Authority (HKMA) says it will start the next phase of Project Ensemble, an initiative aimed at fostering and shaping the tokenisation ecosystem in Hong Kong, launched in March 2024. The pilot will build on the sandbox experimentation that the authority has carried out since August last year, which allowed industry participants to test use cases end-to-end for settling digital asset transactions using tokenised deposits.

The pilot phase will see banks, including Standard Chartered Bank, HSBC, and firms such as Blackrock and Franklin Templeton, testing efficient settlement of real-value tokenised transactions. The initial focus will be on enabling market participants to utilise tokenised deposits in tokenised money market fund transactions, while managing liquidity and treasury in real time.

“This milestone represents a significant advancement in enabling real-value transactions involving tokenised deposits and digital assets within a controlled pilot environment,” HKMA says.

The pilot phase of the project will run throughout 2026. Initially, the interbank settlement of tokenised deposit transactions will be facilitated via the HKD Real Time Gross Settlement (RTGS) system, before the pilot environment is progressively upgraded and enhanced to support settlement in tokenised Central Bank Money (CeBM) on a 24/7 basis. 

Eddie Yue, chief executive of the HKMA, says the project highlights “Hong Kong’s pioneering role in shaping the future of digital finance, both regionally and globally.”

Earlier in the week the HKMA announced that it had issued $10bn worth of digital green bonds in four currencies, including the HKD and RMB. Both those tranches had the option of settling via tokenised central bank money alongside traditional settlement rails in the primary issuance process, helping to reduce settlement times, costs and counterparty credit risk.

The issuance marked the first digital bond offering in the world that integrated tokenised central bank money in the form of e-CNY and e-HKD in the settlement process. To date, the issuance marks the largest ever digital bond launch in the world.

The HKMA also pushed the tenor out to up to five years and it noted the increase in the number of direct participants on the digital asset platform as well as in arranging banks. “In terms of investor type, the issuance continued to attract subscriptions by a wide spectrum of institutional investors globally, covering asset managers, banks, insurance companies, private banks and others, including a substantial number of first-time investors in digital bonds,” the regulator said.