The Hong Kong Monetary Authority (HKMA), serving as the central bank for the region, has launched an innovative subsidy program to encourage the issuance of tokenized bonds in its capital markets.
This initiative, named the Digital Bond Grant Scheme (DBGS), aims to reduce some of the financial burdens associated with these digital bond projects.
Details of the Digital Bond Grant Scheme
As detailed in a statement issued on November 28, the HKMA’s DBGS can cover up to 50% of qualifying expenses related to digital bond issuances, with a maximum funding limit.
The primary objective of this initiative is to stimulate growth in the digital securities market and promote the broader application of tokenization technology within capital market operations.
To participate, interested issuers must meet specific eligibility requirements.
Under the DBGS, each qualifying company can receive as much as $321,184 (approximately 2.5 million Hong Kong dollars) for up to two separate issuances, and there is also an option for a partial grant.
Applications for the grant opened the same day and will remain available for an initial period of three years.
Companies seeking a partial grant must issue bonds digitally through a platform operated by the Central Moneymarkets Unit (CMU) and demonstrate a significant operational presence in Hong Kong.
Requirements for Grant Eligibility
For those aiming for the full grant, their bonds need to reach a minimum total value of $128.5 million, be distributed to no fewer than five investors, and either be listed on the Stock Exchange of Hong Kong (SEHK) or on an authorized platform approved by local financial regulators.
Eddie Yue, the HKMA’s chief executive, expressed that the creation of the DBGS stems from insights gained during Project Evergreen, which commenced in 2021 to explore the use of distributed ledger technology in financial markets.
Yue also noted that some bond issuers face persistent challenges in adopting tokenized solutions, leading the HKMA to implement more incentives to encourage their widespread use.
Recent Developments in Hong Kong’s Crypto Landscape
In an exciting development earlier this year, on February 16, the Hong Kong government successfully launched $100 million in tokenized green bonds as part of its Green Bond Programme.
Yue highlighted that tokenization has shown significant momentum, with global estimates indicating that over $10 billion worth of tokenized bonds have been issued throughout the past decade.
In a related update, a Financial Times report on November 28 unveiled that Hong Kong officials are considering tax exemptions for cryptocurrency gains, particularly for hedge funds, private equity firms, and family investment vehicles.
This proposal aims to bolster the region’s reputation as a leading crypto financial hub and is currently open for public consultation for six weeks.
It may also include tax breaks for investments in private credit, international real estate, and carbon credits.
Additionally, ZA Bank, the largest virtual bank in Hong Kong, announced a fresh service on November 25 that allows retail clients to directly buy and sell Bitcoin and Ethereum using traditional fiat currency, further enhancing accessibility to cryptocurrencies in the territory.
Source: Cointelegraph
