Hong Kong is advancing Web3 technologies through the launch of tokenised bonds, strengthening its position as a global digital asset hub.
History of Tokenised Bonds in Hong Kong
Hong Kong's journey into tokenised bonds began in 2021 with 'Project Genesis'—an initiative in collaboration with the Bank for International Settlements.
- February 2023: first tokenised green bond worth HK$800 million. - February 2024: second issuance—a multi-currency digital bond totaling HK$6 billion in HKD, RMB, USD, and EUR.
These initiatives laid the groundwork for the third issuance, which includes tax exemptions and asset expansion.
What’s New in the Third Tokenised Bond?
The third tokenised bond offers:
- Stamp Duty Exemption: tokenised ETFs will now be exempt from stamp duty, creating cost advantages for investors. - Asset Expansion: tokenisation will encompass precious metals, non-ferrous metals, and solar panels.
This opens access to traditionally illiquid asset classes, enabling fractional ownership and 24/7 trading.
Benefits and Challenges of Hong Kong's Strategy
The advantages of this new strategy include:
- Fractional ownership allows more investors to participate in high-value markets. - 24/7 trading brings liquidity and efficiency to bond and asset markets. - Stamp duty exemption offers a financial incentive to invest in tokenised ETFs. - Broader asset tokenisation supports market democratisation.
However, there are challenges to navigate:
- Integration of traditional financial systems with blockchain infrastructure. - Blockchain platforms must demonstrate resilience, scalability, and cross-chain compatibility. - Regulatory complexities grow with the need for investor protection, KYC/AML compliance, and risk management.
With tax incentives and an expanding scope of tokenised offerings, Hong Kong is setting the stage for the next phase of digital finance. Its success will depend on how well it aligns with international regulations and scales secure blockchain infrastructure.
