The Hong Kong Financial Authority (HKMA) launched a report on Aug. 25 detailing the findings of its Mission Evergreen research which analyzed the market impression of bond tokenization.
In a 24-page overview, the Hong Kong regulator laid out use circumstances, advantages and any challenges confronted throughout the research. The concluding sentiment being that tokenization offers enchancment for the bond market.
Eddie Yue, the chief government of the HKMA, mentioned the research highlighted the potential of deploying distributed ledger know-how (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.”
Among the main efficiencies of bond tokenization revealed by the research 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 by 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 mentioned previous to mass adoption, many challenges must be overcome.
“As extra monetary establishments give you their very own tokenization options,” he mentioned. “It will likely be essential to contemplate how totally 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 might also should be fine-tuned to maintain up with – and facilitate – know-how adoption.”
“Current authorized and regulatory regimes might also should be fine-tuned to maintain up with – and facilitate – know-how adoption.”
This report comes as Hong Kong has been progressively shifting in direction of positioning itself as a hub for crypto and decentralized finance exercise. Lots of 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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