On February 16, the Hong Kong government declared that it had released green bonds worth 800 million Hong Kong dollars, which is approximately $100 million.
The bonds were tokenised and issued as part of the Green Bond Programme. Four banks underwrote the bonds, and they were priced at a yield of 4.05 percent.
As per the declaration, the Hong Kong government utilised GS DAP, a tokenisation protocol developed by Goldman Sachs, for the bonds.
GS DAP works on a private blockchain network to settle security tokens representing beneficial interests in bonds in a T+1 payment-vs-payment process. It also uses cash tokens that represent claims on the Hong Kong dollar.
Tokenisation is a recent idea in the financial industry that involves converting assets or securities into digital tokens. The use of blockchain technology for creating digital tokens allows issuers to offer more efficiency, accessibility, and transparency in the issuance and trading of securities.
With the introduction of digital settlement of bonds on private blockchain networks, there has been a significant departure from traditional settlement processes that typically rely on manual verification and paper-based documentation.
The Financial Secretary, Paul Chan, stated that the issuance of tokenised green bonds is a significant achievement for Hong Kong. He stated that Hong Kong has been promoting the use of innovative technologies in the financial industry and is exploring new concepts and technologies to enhance the efficiency, transparency, and security of financial transactions.
The successful release of the tokenised green bond showcases the increasing acceptance of blockchain technology in the financial sector and signifies a significant move towards the advancement of sustainable finance worldwide.
The Hong Kong government has shown its dedication to the growth of digital asset infrastructure. In December 2022, it introduced two crypto futures exchange-traded funds that raised over $70 million even before their launch.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash