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The Hong Kong Monetary Authority (HKMA) published a report on Aug. 25 that outlines the results of its Project Evergreen study, which examined the market implications of bond tokenization.
In a 24-page summary, the Hong Kong regulator presented use cases, advantages, and challenges encountered during the study. The overall conclusion indicates that tokenization enhances the bond market.
Eddie Yue, the chief executive of the HKMA, stated that the study underscored the potential of utilizing distributed ledger technology (DLT) for actual capital market transactions within the existing legal framework in Hong Kong.
“It also demonstrated the potential of DLT to improve efficiency, liquidity, and transparency in bond markets.”
Among the key efficiencies of bond tokenization identified in the study were the capability to eliminate paper usage and the necessity for a physical global certificate, thereby saving time and reducing errors, the ability for various parties to interact on a shared DLT platform, and improved transparency through real-time data synchronization.
Furthermore, it facilitates atomic DvP settlements for bond transfers and promotes comprehensive DLT adoption.
Related: HashKey to commence Bitcoin and Ether retail trading in Hong Kong from Aug. 28
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Yue also noted the limitations of the experiment, stating that bond tokenization remains in its “infancy.” He mentioned that numerous challenges must be addressed before widespread adoption can occur.
“As more financial institutions develop their own tokenization solutions,” he remarked. “It will be essential to consider how different solutions can connect and interact with one another as well as with traditional systems to prevent fragmentation.”
“Existing legal and regulatory frameworks may also require adjustments to keep pace with – and support – technology adoption.”
“Existing legal and regulatory frameworks may also require adjustments to keep pace with – and support – technology adoption.”
This report emerges as Hong Kong gradually positions itself as a center for crypto and decentralized finance activities. Numerous firms have reportedly been seeking a Hong Kong crypto license.
On July 27, Hong Kong announced its collaboration with Saudi Arabia on tokens and payments.
Magazine: Real reason for China’s war on crypto, 3AC judge’s embarrassing mistake: Asia Express
