Hong Kong has successfully sold HK$800 million (Approx. $102 million) worth of tokenized green bonds under the Government Green Bond Program. This marks the world’s first tokenized green bond issued by a government.
Green bonds are debt instruments issued by governments or organizations for financing or refinancing eco-friendly projects.
World’s First Tokenized Green Bond
According to a Thursday press release by the Hong Kong Monetary Authority (HKMA), the bond was distributed by four banks, two of whom also acted as investor custodians.
The banks are: Bank of China (Hong Kong), HSBC, Crédit Agricole CIB, and Goldman Sachs. Bank of China and HSBC are the investor custodians.
The Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority is the settlement and settlement system for the bond, leveraging Goldman Sachs’ tokenization platform GS DAP. The tokenized bond carries a coupon rate of 4.05%, according to the authority.
Bond Process to be Executed on Private Blockchain
According to HKMA, subsequent bond processes, including coupon payment, secondary market transaction settlement, and maturity redemption, will be carried out “digitally on a private blockchain network.”
“The records on the private blockchain network (on-chain records) are legally clear and final records that prove the ownership of security tokens and cash tokens by all parties on the platform,” the authority said.
HKMA stated that it would release a white paper at a suitable time in the future, “summarizing the experience” of the tokenized bond issuance.
Commenting on the development, Paul Chan, the Financial Secretary of Hong Kong stated that the move is part of the government’s efforts to actively explore “new concepts and technologies to improve the efficiency, transparency and security of financial transactions.”
“We published in October last year about virtual assets in Hong Kong. The policy declaration of development shows that we actively embrace financial innovation related to the third generation Internet (Web3) and promote the prudent development of the market. The SAR government will continue to promote the innovative development of the financial market.”
