Hong Kong Central Bank Launches Subsidy Program to Boost Tokenized Bond Issuance

Hong Kong’s central bank, the Hong Kong Monetary Authority (HKMA), is stepping up its game in the world of digital finance by launching a new scheme to support companies looking to issue tokenized bonds. This initiative, announced on November 28, aims to boost the adoption of digital securities and make capital markets more innovative.

What’s the Deal with the Digital Bond Grant Scheme?

The HKMA's Digital Bond Grant Scheme (DBGS) will cover up to 50% of eligible expenses for companies that issue these digital bonds, with a maximum grant of HK$2.5 million (around $321,184 USD) available for each issuance. This program is set to run for an initial period of three years, starting from the announcement date.

According to the HKMA, this scheme is designed to encourage broader use of tokenization technology in capital markets. They believe that by subsidizing costs, they can help overcome some of the barriers that issuers face when adopting this new technology.

Who Can Benefit?

To qualify for the full grant, companies must issue bonds with a minimum size of HK$1 billion (approximately $128.5 million USD) and list them on either the Stock Exchange of Hong Kong or a licensed platform. Additionally, the bonds must be issued digitally through a platform operated by the Central Moneymarkets Unit (CMU) and by companies that have a significant presence in Hong Kong.

For those who don’t meet the full grant criteria, there’s also a half grant option available.

Background and Future Outlook

The DBGS is a result of research from Project Evergreen, which was commissioned back in 2021 to explore how distributed ledger technology could be applied in financial markets. Eddie Yue, the chief executive of the HKMA, noted that while tokenization has gained traction—over $10 billion worth of tokenized bonds have been issued globally in the last decade—there are still hurdles preventing some issuers from fully embracing this technology.

In addition to this initiative, Hong Kong's government recently issued $100 million in tokenized green bonds as part of its Green Bond Programme earlier this year. This move highlights Hong Kong's commitment to integrating innovative financial solutions into its market.

Looking Ahead

With these developments, Hong Kong is positioning itself as a major player in both digital finance and sustainable investment practices. As a digital finance solution provider, Rapidz understands the importance of staying ahead in a rapidly evolving financial landscape. We enable clients to focus on growing their business while we handle the complexities of financial transactions.