Bank of China's investment bank unit, BOCI, has made a significant move in the field of finance by issuing 200 million Chinese yuan ($28 million) in digital structured notes minted on the Ethereum blockchain. This groundbreaking development positions BOCI as the first Chinese financial institution in Hong Kong to tokenize securities, marking a notable milestone in the industry.
The product was originated by UBS, a leading financial institution, specifically for its clients in the Asia-Pacific region.
In collaboration with UBS, BOCI is driving the simplification of digital structured notes asset markets, with a particular focus on catering to customers in the Asia-Pacific region through the development of blockchain-based digital structured notes. Ying Wang, Vice CEO of BOCI, expressed the significance of their partnership with UBS and their joint efforts to streamline digital finance for their clientele in the region.
UBS, in parallel, is actively involved in tokenization across various sectors, including structured products, fixed income, and repo financing. In December 2022, they successfully issued a $50 million tokenized fixed-rate note under the governance of both Hong Kong and Swiss law, utilising a permissioned blockchain.
Notably, Hong Kong has been making strides in the blockchain industry. They recently opened crypto exchanges to retail users on June 1. Furthermore, Joseph Chan Ho-lim, the Undersecretary for Financial Services and the Treasury expressed Hong Kong's active participation in the blockchain space and its aim to establish a regulatory framework for stablecoins within a year.
Hong Kong's involvement in tokenization is evident with the release of a HK$800 million green bond back on February 16, tokenized on Goldman Sachs' GS DAP protocol with an annual yield of 4.05%. Additionally, in December 2022, Hong Kong successfully raised nearly $70 million prior to launching two Bitcoin futures exchange-traded funds.
This collaboration between BOCI and UBS not only represents a significant milestone in Hong Kong's tokenized securities landscape but also underscores the potential of blockchain technology to revolutionise the financial industry. With their combined expertise and dedication to innovation, both institutions are poised to drive further advancements in the digital finance sector.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash