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HK to Issue Tokenised Green Bond, Open Market for Virtual Assets ETFs Trading

The HKSAR government published its latest policy statement Monday related to the outlook of virtual assets development, including the issuance of tokenised green bonds and the preparation of developing the digital Hong Kong Dollar.

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Over 200 key finance entrepreneurs gathered at the Fintech Week that started on Monday in Hong Kong, which is one of the critical events for the city to show its confidence in restoring its economy amid the recovery from COVID-19.

Paul Chan, Financial Secretary of HKSAR, spoke to Fintech Week virtually due to his infection with Covid 19 during his overseas trip to Saudi Arabia. Chan introduced the latest policy statement on virtual assets to the public, saying that “We want to make our policy stance clear to global markets, to demonstrate our determination to explore financial innovation together with the global, virtual-assets community,” expecting to be the first global government bonds in the hope that to maximise with the advantages and innovation of fintech in terms of virtual assets.

“The policy statement explains in detail our vision and approach, regulatory regimes, thoughts on investors’ exposures, and our pilot projects to embrace the technological benefits and financial innovations brought by virtual assets.”

Per the latest policy statement issued by the government. Serval pilot projects are ongoing, including:

(a) NFT issuance for Hong Kong Fintech Week (“HKFTW”) 2022: A proof-of-concept project on our part to engage the Fintech and Web3 community;

(b) Green bond tokenisation: Tokenising Government Green bond issuance for subscription by institutional investors;

(c) e-HKD: The potential “backbone” and anchor bridging legal tender and VA, offering price stability and confidence needed to empower more innovations.

Green Bond Tokenisation

Regarding the upcoming tokenisation of green bonds, Eddie Yu, Chief Executive of the Hong Kong Monetary Authority (HKMA), spoke at the same event and disclosed that the authority is planning to issue the first batch of green bonds this year globally by adopting blockchain technology, aiming to promote the product to insitutional investors on a small scale first. Details will be announced further later.

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Meanwhile, cross-border payment with digital Hong Kong dollars, or e-HKD, is also ongoing. The head of the regulator said the pilot tests of mBridge were going well. Over $170 million in Hong Kong dollars with 160 crosses broader transactions has been conducted, which are associated with around 20 commercial banks in four regions.

Opening market for VA ETFs trading

Given the increasing acceptance of virtual assets as a vehicle for investment allocation by global institutional or individual investors, the policy statement reads that Hong Kong’s recognition would open the possibility of allowing Exchange Traded Funds (ETFs) on virtual assets in Hong Kong.

Yet, the turmoil and the volatility triggered by the so-called crypto winter in the first half year resulted in significant exposure to investors and hampering the performance of the crypto market. In terms of cryptocurrency trading development, Yu, the head of HKMA, said Hong Kong is capable of developing the ecosystem of virtual assets as long as supported by sufficient education for investors and a comprehensive regulatory system.

The fintech Industry welcomes policy statements in general.

Adrian Cheng, CEO of New World Development, welcomes HKSAR’s latest stance on the development of virtual assets in the city.

Speaking to Blockchain.News through a statement, Cheng said that he fully supports the government’s issuance.

“With our unique position in Greater Bay Area, Hong Kong will dominate regional development of GBA cross-border blockchain infrastructure and blockchain ecosystem.”

New World Development believes in virtual assets financial markets, CBDC payment, and GBA blockchain infrastructures would be key strengths and pillars for the city, transforming the city to be a digital financial centre.    

Cheng suggested regulations in Hong Kong “would need to further evolve and expand beyond the current regimes of SFC Type 1 & 2 client asset holding licenses and trustee license.”

The real estate property company is actively engaged in the crypto community and NFT projects. In August, Cheng purchased an NFT of 101 Azukis, but also invested in RTFKT and Animoca Brands, expanding its footprint in the Web 3 industry. Previously, Adrian Cheng planned to raise $500 million in the next 18 months to invest in blockchain assets, credit, and private equity, betting on private companies and digital assets, according to Bloomberg.

 “Insurance is a critical component in the virtual asset ecosystem, as it ensures sustainability by offering risk transfer options. At the same time, it also forms the missing piece of the global virtual asset regulatory framework, including Hong Kong,” said Becky Tam, Chief Operating Officer of OneInfinity, adding that “the market will grow systematically ultimately, as credibility will be promoted to expand the audience from the niche blockchain players to the institutional players and further to the public.”

Image source: Blockchain.News

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