The Hong Kong Financial Authority (HKMA) launched a report on Aug. 25 detailing the findings of its Challenge Evergreen research which analyzed the market influence of bond tokenization.
In a 24-page overview, the Hong Kong regulator laid out use circumstances, advantages and any challenges confronted in the course of the research. The concluding sentiment being that tokenization offers enchancment for the bond market.
Eddie Yue, the chief govt of the HKMA, stated the research highlighted the potential of deploying distributed ledger know-how (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.”
Among the main efficiencies of bond tokenization revealed via the research had been the flexibility to go paperless and get rid of the necessity for a bodily world certificates – saving each hours and errors, the flexibility 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 continues to be in its “infancy.” He stated previous to mass adoption, many challenges must be overcome.
“As extra monetary establishments provide you with their very own tokenization options,” he stated. “It is going to be essential to contemplate how totally different options can join and work together with one another in addition to typical methods to keep away from fragmentation.”
“Present authorized and regulatory regimes may additionally have to be fine-tuned to maintain up with – and facilitate – know-how adoption.”
“Present authorized and regulatory regimes may additionally have to be fine-tuned to maintain up with – and facilitate – know-how adoption.”
This report comes as Hong Kong has been steadily shifting in the direction of positioning itself as a hub for crypto and decentralized finance exercise. A whole lot 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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