Hong Kong issues HK$800m in tokenized green bonds

The bonds were underwritten by four banks and priced at a yield of 4.05%.

The Government of the Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR Government) announced on Feb 16 that it had issued HK$800 million in tokenized green bonds, under the Government’s Green Bond Program (GBP). The bonds were underwritten by four banks and priced at a yield of 4.05%.

According to the announcement, the platform used Goldman Sachs’ tokenization protocol GS DAP for the bond, which uses a private blockchain network to settle security tokens representing the beneficial interests of bonds in a T+1 payment-vs-payment (DvP) manner, and cash tokens representing claims on the HKMA’s Hong Kong dollar legal tender. 

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 more transparency, efficiency, and accessibility in the issuance and trading of securities. This move towards the digital settlement of bonds on private blockchain networks marks a significant shift from traditional settlement processes, which often rely on manual verification and paper-based documentation. 

Financial Secretary Paul Chan noted that the successful issuance of tokenized green bonds marks a milestone for Hong Kong. He shared: 

“Hong Kong has been actively promoting the application of innovative technologies in the financial sector, actively exploring new concepts and technologies to improve the efficiency, transparency, and security of financial transactions.”

The successful issuance of the tokenized green bond highlights the growing adoption of blockchain technology in the financial industry and marks an important step towards the development of sustainable finance globally.

Related: NASDAQ-listed Interactive Brokers to offer crypto trading in Hong Kong

The government of Hong Kong continues to indicate that it remains committed to the development of digital asset infrastructure. In December 2022, Hong Kong introduced two exchange-traded funds (ETFs) for cryptocurrency futures, raising over $70 million before its launch. 

In October 2022, Cointelegraph reported that Hong Kong’s securities regulator wants to allow retail investors to invest directly in virtual assets and to reconsider current crypto trading requirements.  According to Elizabeth Wong, head of the fintech unit at the Securities and Futures Commission (SFC), the government of Hong Kong is considering introducing its own bill to regulate crypto in its own China-free way.