The Hong Kong Financial Authority (HKMA) launched a report on Aug. 25 detailing the findings of its Undertaking Evergreen examine which analyzed the market impression of bond tokenization.
In a 24-page overview, the Hong Kong regulator laid out use instances, advantages and any challenges confronted throughout the examine. The concluding sentiment being that tokenization supplies enchancment for the bond market.
Eddie Yue, the chief govt of the HKMA, mentioned the examine highlighted the potential of deploying distributed ledger expertise (DLT) to actual capital markets transactions with the present authorized framework current in Hong Kong.
“It additionally confirmed the potential in DLT to boost effectivity, liquidity and transparency in bond markets.”
A few of the major efficiencies of bond tokenization revealed via the examine have been the power to go paperless and get rid of the necessity for a bodily international certificates – saving each hours and errors, the power to work together between numerous events on a standard DLT platform and enhanced transparency via real-time information 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 remains to be in its “infancy.” He mentioned previous to mass adoption, many challenges must be overcome.
“As extra monetary establishments give you their very own tokenization options,” he mentioned. “Will probably be essential to contemplate how completely different options can join and work together with one another in addition to standard programs to keep away from fragmentation.”
“Current authorized and regulatory regimes may additionally should be fine-tuned to maintain up with – and facilitate – expertise adoption.”
“Current authorized and regulatory regimes may additionally should be fine-tuned to maintain up with – and facilitate – expertise adoption.”
This report comes as Hong Kong has been regularly shifting in the direction of positioning itself as a hub for crypto and decentralized finance exercise. A whole lot of corporations 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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