Tokenization in Hong Kong has received support from regulators such as the HKMA and SFC as well as local private sector companies like HSBC and HashKey.
Financial regulator and central bank of Hong Kong, the Hong Kong Monetary Authority (HKMA), is teaming up with industry to investigate asset tokenization.
On May 7, HKMA made an official announcement on the formation of a special community to create tokenization standards. This community would include regulators and people from the sector.
The group’s name is “Project Ensemble Architecture Community,” and its stated goal is to oversee and assist with the growth of tokenization initiatives in Hong Kong.
A further goal of the project is to facilitate the interchange of digital currencies used by various financial institutions, known as wholesale central bank digital currencies (wCBDC).
The statement states that the community’s first priority will be to create a system that allows for the easy settlement of tokenized deposits between banks using wCBDC for transactions involving tokenized assets.
Members of the CBDC Expert Group, the BIS Innovation Hub Hong Kong Centre, the Hong Kong Securities and Futures Commission, and the Hong Kong Medical Association will make up the Project Ensemble Architecture Community upon launch.
Bank of China (Hong Kong), Hang Seng Bank, HSBC, Standard Chartered Hong Kong, HashKey Group, Ant Digital Technologies, and Microsoft Hong Kong are the seven members from the private sector.
In order to promote more study and testing of tokenization use cases, authorities and corporations are anticipated to collaborate on the design and implementation of Project Ensemble Sandbox. The launch date is set for mid-2024.
In the announcement, HKMA said, “The construction of the community is based on a variety of meticulous considerations, including the members’ competence in contributing to the growth of the tokenization market in Hong Kong, experience and proficiency in related sectors and inventive capabilities.”
“As the need arises, the HKMA will assess the size and make-up of the community in collaboration with the industry.”
The declaration by the HKMA follows the authority’s first disclosure of Project Ensemble, which aims to facilitate the growth of the Hong Kong tokenization market, which took place a few months ago.
A variety of real-world assets, including fiat currencies, stocks, commodities, real estate, and more, may be “tokenized” by creating a digital version of them. In 2024, investors are seeking new methods to diversify their portfolios, and one of the important developments is blockchain-based real-world tokenization (RWA).
Some predictions indicate that RWA tokenization has the ability to transform several sectors and reach a market size of $16 trillion by 2030.
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