The Hong Kong Financial Authority (HKMA) launched a report on Aug. 25 detailing the findings of its Challenge Evergreen research which analyzed the market affect of bond tokenization.
In a 24-page overview, the Hong Kong regulator laid out use instances, advantages and any challenges confronted throughout the research. The concluding sentiment being that tokenization gives enchancment for the bond market.
Eddie Yue, the chief government of the HKMA, stated the research highlighted the potential of deploying distributed ledger expertise (DLT) to actual capital markets transactions with the present authorized framework present in Hong Kong.
“It additionally confirmed the potential in DLT to boost effectivity, liquidity and transparency in bond markets.”
A few of the main efficiencies of bond tokenization revealed via the research had been the power to go paperless and eradicate the necessity for a bodily international certificates – saving each hours and errors, the power to work together between varied events on a standard DLT platform and enhanced transparency via real-time knowledge synchronization.
Moreover, it permits for atomic DvP settlements for bond transfers and encourages end-to-end DLT adoption.
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Yue additionally identified the shortcomings of the experiment saying that the tokenization of bonds continues to be in its “infancy.” He stated previous to mass adoption, many challenges must be overcome.
“As extra monetary establishments give you their very own tokenization options,” he stated. “Will probably be essential to think about how completely different options can join and work together with one another in addition to standard methods to keep away from fragmentation.”
“Current authorized and regulatory regimes can also must be fine-tuned to maintain up with – and facilitate – expertise adoption.”
“Current authorized and regulatory regimes can also must be fine-tuned to maintain up with – and facilitate – expertise adoption.”
This report comes as Hong Kong has been progressively shifting in the direction of positioning itself as a hub for crypto and decentralized finance exercise. Tons of of companies have reportedly been lining up for a Hong Kong crypto license.
On July 27, Hong Kong introduced it’s collaborating with Saudi Arabia on tokens and funds.
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