Hong Kong to subsidise $321K for tokenised bond issuances

The Hong Kong Monetary Authority (HKMA) has announced the Digital Bond Grant Scheme (DBGS) to promote tokenisation in capital markets.

The initiative offers subsidies of up to $321,184 (2.5 million Hong Kong dollars) per eligible digital bond issuance to encourage blockchain technology adoption in the securities market.

Launched on November 28, the DBGS will run for an initial period of three years.

The program reimburses up to 50% of eligible expenses for digital bond issuances.

Companies can apply for two grants, with a cap of $321,184 for a full grant and $160,597 for a half grant.

To qualify for the half grant, bonds must be issued on a platform operated by Hong Kong's Central Moneymarkets Unit (CMU) by a company with significant operations in the region.

For the full grant, bonds need a minimum size of $128.5 million (1 billion Hong Kong dollars), must be issued to at least five investors, and listed on the Stock Exchange of Hong Kong or a licensed platform.

The DBGS is an outcome of Project Evergreen, a research initiative exploring distributed ledger technology for financial markets.

HKMA Chief Executive Eddie Yue acknowledged challenges faced by issuers in adopting tokenised bonds and highlighted the grant as an "additional incentive" to boost participation.

Earlier this year, Hong Kong’s government issued $100 million in tokenised green bonds under its Green Bond Programme.

According to Yue, over $10 billion in tokenised bonds have been issued globally in the past decade.

Meanwhile, Hong Kong continues to enhance its position as a financial hub.

Authorities are reportedly considering tax exemptions on crypto gains for hedge funds, private equity, and family offices.

Additionally, ZA Bank, Hong Kong's largest virtual bank, recently enabled retail users to trade Bitcoin and Ether using fiat currencies.