As a seasoned analyst with over two decades of experience in the financial sector, I have witnessed the evolution of technologies reshaping the landscape of capital markets. The Hong Kong Monetary Authority (HKMA) launching the Digital Bond Grant Scheme (DBGS) is undeniably a significant step towards embracing tokenization in its capital markets.
The Hong Kong Monetary Authority (HKMA) has started a program to help reduce some expenses related to the creation of tokenized bonds. This initiative is intended to stimulate broader usage of tokenization within Hong Kong’s financial marketplaces.
As per the declaration made on November 28th and its accompanying instructions, the Hong Kong Monetary Authority’s Digital Bond Grant Scheme (DBGS) will cover half of the “Qualifying Costs” associated with each approved digital bond issue. However, this subsidy is limited to a specific sum.
In a statement, HKMA expressed their goal to foster growth in the digital securities sector by increasing the usage of tokenization tech in financial transactions.
If you meet the necessary conditions, a full grant worth up to $321,184 (2.5 million HKD) and no more than two grants per company can be awarded. Additionally, a half grant amounting to $160,597 (1.25 million HKD) is also an option.
The DBGS will start accepting applications on Nov. 28 and run for an initial period of three years.
In order to be eligible for the half grant, the bond needs to be electronically issued through a digital platform managed by the Central Moneymarkets Unit (CMU). Moreover, this digital issuance should originate from a company that has a significant presence in Hong Kong.
To receive the entire grant, it’s necessary to issue bonds with a minimum value of HKD 1 billion (approximately $128.5 million USD) to at least five investors. These bonds should be listed on either the Stock Exchange of Hong Kong Limited (SEHK) or a platform authorized by Hong Kong’s financial regulatory body.
In a November 28th update regarding Project Evergreen, initiated in 2021 to investigate the application of distributed ledger technology within financial markets, the CEO of the Hong Kong Monetary Authority (HKMA), Eddie Yue, stated that the Digital Banking and Global Services (DBGS) initiative was a direct outcome of this research.
As a researcher delving into the realm of financial technologies, I’ve come across Yue’s insights that some bond issuers face obstacles in transitioning to tokenized bonds. Consequently, the Hong Kong Monetary Authority (HKMA) has chosen to implement an “extra motivation” to foster “wider adoption,” aiming to inspire more entities to embrace this innovative approach.
On February 16, the administration of Hong Kong launched green bond tokens worth HKD 800 million (approximately USD 100 million) as part of their Green Bond Programme.
Since then, tokenization has picked up significant pace. In fact, it’s been estimated that around $10 billion worth of tokenized bonds have been issued worldwide over the past ten years,” Yue stated.
In my recent analysis, I’ve uncovered that Hong Kong authorities are contemplating exempting cryptocurrency gains from taxation for hedge funds, private equity firms, and family investment vehicles. This move is aimed at bolstering Hong Kong’s status as a prominent global hub for crypto finance.
The proposition invites feedback over a duration of six weeks and encompasses exceptions for investing in private credit, foreign real estate, and carbon offsetting.
On November 25th, the largest digital bank in Hong Kong, known as ZA Bank, introduced a new feature that enables individual customers to purchase or sell Bitcoin (BTC) and Ether (ETH) with traditional currency (fiat) without any intermediaries involved.
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2024-11-29 09:13