Hong Kong Tokenized Bonds: Unlocking a New Era of Digital Finance by 2026

Key Points

1. Hong Kong plans to formalize tokenized bond issuance as a regular practice in the 2025–26 budget cycle, with legislation expected to cover the digital asset industry.

2. Tokenized bonds are traditional bonds represented on a blockchain, offering benefits like increased efficiency, fractional ownership, and broader investor accessibility.

3. The Hong Kong Monetary Authority (HKMA) has already conducted pilot issuances, including an HK$800 million tokenized green bond in February 2023, demonstrating feasibility.

4. Tokenized bonds provide advantages such as near-instant settlement, reduced intermediaries, lower costs, and greater transparency compared to traditional bonds.

5. Hong Kong aims to balance innovation with regulatory protection, implementing robust AML/CTF standards to ensure security in the digital asset ecosystem.