The Hong Kong Monetary Authority (HKMA) has introduced a subsidy program to encourage the issuance of tokenized bonds.
on November 28, the HKMA announced the Digital Bond Grant Scheme (DBGS), which will cover up to 50% of eligible expenses for issuing tokenized bonds, with a limit of US$321,184 (2.5 million Hong Kong dollars) per grant. Each company can receive a maximum of two grants.
The initiative aims to promote the growth of the digital securities market and increase the adoption of tokenization in capital market transactions. DBGS will be open for an initial period of three years, and applications will be accepted starting November 28.
To qualify for half of the grant, the bond must be issued on a platform operated by the Central Moneymarkets Unit (CMU), issued in Hong Kong, and the issuer must maintain a significant local presence.
The full subsidy requires a minimum bond amount of $128.5 million issued to at least five investors and listed on the Stock Exchange of Hong Kong(SEHK) or a platform licensed by Hong Kong’s financial regulator.
HKMA CEO Eddie Yue attributed DBGS’s findings to Project Evergreen, a 2021 research initiative exploring distributed ledger technology in financial markets. Yue acknowledged that although tokenized bonds are gaining popularity, issuers are still struggling with adoption, prompting the HKMA to introduce financial incentives to speed up adoption.
Hong Kong has already made progress in tokenization. In February 2023, the government issued $100 million in tokenized green bonds under its Green Bond Program. According to Yue, more than $10 billion in tokenized bonds have been issued worldwide over the past decade.
The DBGS coincides with Hong Kong’s broader efforts to cement its position as a cryptocurrency-friendly financial center.
Hong Kong will exempt hedge funds from tax
the Financial Times reported on November 28 that authorities are considering tax exemptions on cryptocurrency profits for hedge funds, private equity and family offices. This proposal, currently under consultation, also includes exemptions for private loans, foreign real estate and investments in carbon credits.
In a related development, Hong Kong’s largest virtual bank, ZA Bank, launched a service on November 25 that allows retail users to buy and sell Bitcoin and Ether directly using the fiat currency.
In October, Hong Kong’s financial regulator granted the third license under the new cryptocurrency trading platform system, with plans to approve more by the end of the year.
At the time, Julia Leung, director-general of the Securities and Futures Commission (SFC), confirmed thatHKVAX is the latest company to receive a license to operate as a cryptocurrency exchange in Hong Kong.
Leung pointed out that 11 other platforms are now on the SFC’s “deemed licensed” list, which includes companies that have applied under the new system. The SFC has conducted preliminary on-site inspections of these applicants and asked them to make the necessary changes to meet regulatory requirements. Leung expressed the regulator’s intention to issue more licenses in batches by the end of the year.
