FSTB and HKMA to further unlock potential of distributed ledger technology in Hong Kong's fixed income market
The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) jointly announced today (June 29) that they have concluded the first phase of a review regarding the further adoption of distributed ledger technology (DLT) in Hong Kong's fixed income market (the review). Findings of the review suggest that Hong Kong's legal and regulatory environment is already sufficiently flexible for tokenised bond issuances. In the next phase, a legislative review will be carried out to boost the more extensive use of DLT in the fixed income market and digital assets.
First-phase findings and enhancements
The FSTB and the HKMA have concluded the first phase of the review, and would like to thank the feedback received from various industry stakeholders, including members of the HKMA Tokenised Bond Expert Group. The first-phase findings suggest that Hong Kong's legal and regulatory environment is already sufficiently flexible for tokenised bond issuances, as demonstrated by the Government's three landmark issuances, as well as a growing pool of corporate issuances, including those issued by Asian and Middle Eastern issuers.
To further facilitate the market in harnessing the potential of DLT applications in the fixed income market, the review has identified a few legal issues worthy of further clarification and enhancement.
Issuing clarifications on DLT record keeping
As a first step, the Companies Registry (CR) has issued a set of Frequently Asked Questions (FAQs) today to affirm that a register of debenture holders maintained with the use of DLT can be deemed as fulfilling the relevant record keeping requirements under the Companies Ordinance (Cap. 622), with a view to providing the market with certainty about DLT record-keeping. The FAQs can be found onwww.cr.gov.hk/en/faq/local-company/register-debenture-holders.htm.
Next phase
The FSTB and the HKMA will embark on the next phase of the review in the second half of this year to explore the necessary flexibilities and legislative changes required for building a future-ready ecosystem to facilitate the more extensive use of DLT in the fixed income market and digital assets more broadly.
Specifically, the next phase of the review will examine the legal enhancements for addressing issues in adopting DLT in the current processes of the fixed income market, as well as concepts involved in a more digitally native setting. Areas under exploration include:
- Allowing electronic execution of issuance documents for tokenised bonds to enable greater efficiency and further automation in the issuance process. For example, recognising the use of electronic signatures in the creation of trusts in connection with the issuance of tokenised bonds and funds; and
- Considering concepts such as possession and transfer in the context of tokenised fixed income instruments, to provide issuers with the flexibility to select the most suitable form of issuance as technology continues to advance.
The FSTB and the HKMA look forward to continued collaboration with various stakeholders in the next phase of the review. In considering potential legal enhancements to further facilitate the use of DLT in the fixed income market, the FSTB and the HKMA will also take reference from, and consider the relevant implications of, the Government's broader digitalisation initiatives.
The Secretary for Financial Services and the Treasury, Mr Christopher Hui, said, "A clear and robust regulatory framework provides a solid foundation for the sustainable development of the digital asset sector. Following the release of the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong (Policy Statement 2.0) last June, this review represents another critical step forward in unlocking the full potential of DLT in our fixed income market. By providing clarifications on DLT record keeping requirements today and exploring further legislative enhancements in the next phase, we are keeping Hong Kong at the forefront of Web3 development and financial innovation."
The Chief Executive of the HKMA, Mr Eddie Yue, said, "Hong Kong is a leader in advancing technology adoption in the bond market. In recent years, the Government has issued three landmark tokenised bond issuances, with the latest in November 2025 being the world's largest digital bond at the time and the first to integrate tokenised central bank money in the form of e-HKD and e-CNY. And we are seeing an expanding network of tokenised bond issuers and investors. This review, conducted jointly by the FSTB and the HKMA, aims to build on this momentum to establish a robust and forward-looking fixed income ecosystem in Hong Kong."
The review was first announced in the 2025-26 Budget, while the Policy Statement 2.0 was published by the FSTB in June 2025. The 2026-27 Budget further sets out the directions of the review.
Source: AI-found images
