According to an announcement made on Thursday, the Hong Kong government successfully issued its first tokenized green bond worth 800 million Hong Kong dollars ($101 million). Additionally, Hong Kong has grandiose plans to become an Asian crypto powerhouse. It will make crypto purchasing, selling, and trading entirely lawful for all of its people in June. This includes institutions in the Chinese mainland.
Hong Kong Kickstarts the Green Bond program
The Government of the People’s Republic of China’s Hong Kong Special Administrative Region (HKSAR Government) announced the successful tokenization of HK$800 million. The tokenization is under the Government Green Bond Program (the Green Bond Programme). This is the world’s first government-issued tokenized green bond.
According to reports, HK’s dollar-tokenized green bond held an online roadshow earlier this week. Furthermore, it was priced yesterday with a 4.05% yield. Four banks underwrote the transaction, two of which served as investor custodians.
The 365-day bond with a yield of 4.05% was launched in partnership with the Bank of China, Crédit Agricole CIB, and HSBC, with Goldman Sachs serving as the platform provider. According to the statement, the bond is not intended for distribution in the United States, Canada, Japan, or any other banned territory.
This is the first-level issue that is used to settle security tokens representing the beneficial interests of bonds on a private blockchain network. It can also cash tokens representing claims on the HK dollar legal tender issued by the HKMA. Subsequent bond activities (such as coupon payment, secondary market transaction settlement, and maturity redemption) will also be handled digitally using the private blockchain network.
Since at least 2021, the HKMA has been investigating tokenized green bond issuance. Green bonds are issued to fund environmentally beneficial projects, and tokenization allows the bonds to be sold digitally and easily.
Green bond tokenization is one of the pilot projects announced in the Government’s Policy Statement on Development of Virtual Assets in Hong Kong. Through a clear policy stance and roadmap, the Government will work towards providing a facilitating environment to promote sustainable and responsible development of the virtual assets sector. We welcome market participants to conduct tokenized issuances in Hong Kong.
Christopher Hui, secretary for Financial Services and the Treasury
Details of the Tokenized Green Bonds
The tokenized green bond is cleared and delivered via CMU, and the transaction via CMU is subject to Hong Kong law’s settlement finality. The records on the private blockchain network (on-chain records) are legally clear and conclusive proof that all participants on the platform own security tokens and cash tokens.
As the first batch of tokenized bonds issued under HK legislation, this issuance illustrates Hong Kong’s ability to provide a flexible and convenient legal and regulatory environment for new bond issuance forms. As the Hong Kong Special Administrative Region Government’s spokesperson for the green bond program, the HKMA will publish a white paper in due time.
The whitepaper will summarize this issuance’s experience and anticipate the next phase. In addition, it will serve as a benchmark for tokenized bond issuance in Hong Kong.
This tokenized green bond was issued under the Green Bond Framework of the HK Special Administrative Region (the Framework). Vigeo Eiris gave independent counsel on the framework, and the Hong Kong Quality Assurance Agency validated this tokenized green bond for the pre-issuance phase of the “Green and Sustainable Finance Certification Scheme”
Hong Kong crypto adoption pushes BTC to 8 months high
A completely open Hong Kong means that money from China can readily flow back into digital assets despite the continued individual ban on crypto. In the midst of U.S. regulators’ war on cryptocurrencies, markets reacted positively to this news by rising 9 percent on the day.
The announcement was made in January by Hong Kong’s Financial Secretary, Paul Chan. According to him, the city intends to become a crypto hub with a robust regulatory framework.
Lark Davis, a YouTuber specializing in cryptocurrencies, opined that it was an exceptionally bullish time for Bitcoin. Additionally, multiple exchange-traded funds (ETFs) have been proposed in Hong Kong.
The largest bank in Singapore, DBS, reportedly plans to apply for a digital asset license on February 13. This will allow the bank to provide cryptocurrency trading to customers in Hong Kong.
Coinbase CEO Brian Armstrong reacted to the development on February 16. He stated that crypto is accessible to everyone and that the United States is ceding sovereignty over crypto to countries like Hong Kong.
Justin Sun, the founder of TRON (TRX), expressed this sentiment. He has consistently asserted that money from China and Asia will drive the next bull market.
