The Hong Kong government announced on Feb. 16 that it has issued HK$800 million (approximately US$100 million) of tokenized green bonds under its green bond program. The bonds were underwritten by four banks and priced at a yield of 4.05%.
According to the announcement, the platform uses Goldman Sachs’ tokenization protocol GS DAP for bonds, which uses a private blockchain network to settle security tokens representing beneficial interests in bonds and cash tokens representing bonds in a T+1 payment-vs. Hong Kong dollar debt.
Tokenization, the process of representing assets or securities as digital tokens, is a relatively new concept in the financial world. By using blockchain technology to create digital tokens, issuers can provide greater transparency, efficiency and accessibility in securities issuance and trading. This shift to digital settlement of bonds on a private blockchain network marks a major shift from traditional settlement processes, which typically rely on human verification and paper documents.
Financial Secretary Paul Chan pointed out that the successful issuance of tokenized green bonds is a milestone for Hong Kong. The successful issuance of tokenized green bonds highlights the growing adoption of blockchain technology in the financial industry and marks an important step in the development of sustainable finance globally. The Hong Kong government went on to say that it will continue to work on the development of digital asset infrastructure. In December 2022, Hong Kong launched two cryptocurrency futures exchange-traded funds, raising more than $70 million before launch.
In October 2022, Cointelegraph reported that Hong Kong’s securities regulator wants to allow retail investors to invest directly in virtual assets and reconsider current cryptocurrency trading requirements. According to Elizabeth Wong, head of the fintech division at the Securities and Futures Commission, the Hong Kong government is considering introducing its own bill to regulate cryptocurrencies in a manner free from Chinese influence.
