Hong Kong’s HKMA launches grant to accelerate bond tokenization adoption

The Hong Kong Monetary Authority has launched a three-year digital bond grant program offering incentives of up to HK$2.5 million to encourage tokenized bond issuances.

In its latest bid to encourage blockchain adoption, Hong Kong has launched a new plan aimed at encouraging the growth of tokenized bonds and strengthening its role in the digital finance revolution. The initiative, announced in Hong Kong’s 2024 Policy Address, aims to accelerate the adoption of tokenization in capital markets transactions and strengthen the city’s role as a hub for digital securities.

In a press release dated November 28, the HKMA announced that the Digital Bond Grant Scheme will accept applications for three years and offer financial support of up to HK$2.5 million (approximately $321,200) to issuers that meet the eligibility criteria set out in the new guidance.

DBGS is part of the HKMA’s broader efforts to promote the use of blockchain in financial markets. In August, the HKMA launched Project Ensemble, a sandbox for testing tokenized real-world assets. The sandbox has already been used to trial digital bond purchases and interbank payments with tokenized deposits, including from major players such as HSBC and HashKey Group.

Tokenization, which involves representing assets as digital tokens on a blockchain, has gained traction among financial institutions seeking efficiencies in areas such as fixed income, green finance and trade finance. By promoting such initiatives, Hong Kong aims to position itself as a leader in blockchain-powered financial innovation in the Asia-Pacific region.