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Hong Kong regulator looks to tokenization to improve bond market

on August 25 Hong Kong Monetary Authority (HKMA) published report showing the results of the study Evergreen ProjectAnalyzing the market impact of bond tokenization.

In a 24-page overview, the Hong Kong regulator summarized the use cases, benefits and challenges encountered during the study. The result was Tokenization improves the bond market.

Eddie YueHKMA’s CEO said the study highlights the potential for use of this technology. distributed ledger technology (DLT) for real capital market transactions, with the current legal framework in Hong Kong.

“It also demonstrated the potential of DLT to increase the efficiency, liquidity and transparency of bond markets.”

Among the main advantages of bond tokenization are, do not use paper and eliminate the need for a physical global certificate (saving hours and errors), Ability to interact between various parties on a common DLT platform this is a Greater transparency thanks to real-time data synchronization.

Yue also pointed out the flaws of the experiment, noting that the tokenization of bonds is still pending. “beginning”. He noted that many challenges will have to be overcome before mass adoption.

“As more and more financial institutions offer their own tokenization solutions,” he declared, “It will be critical to consider how different solutions can connect and interact with each other and with traditional systems to avoid fragmentation.”

‘Existing legal and regulatory regimes may also need to be improved to keep pace with and facilitate technology adoption.’

The report comes as Hong Kong begins to position itself as a hub for crypto assets and decentralized finance. Reportedly hundreds of companies Queued to get a cryptocurrency license in Hong Kong.

On July 27, Hong Kong announced Cooperation with Saudi Arabia about tokens and payments.

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