HKMA Launches Digital Bond Grant Scheme to Accelerate Tokenized Finance
The Hong Kong Monetary Authority (HKMA) has taken a bold leap into the future of finance with the launch of its Digital Bond Grant Scheme (DBGS) on November 28, 2024.
This innovative program is not just another funding initiative—it's a game-changing push to position Hong Kong at the cutting edge of digital securities.
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Substantial Support for Digital Bonds
ONE
The DBGS provides significant funding to issuers of digital bonds, covering 50% of eligible expenses up to a maximum of HK$2.5 million per issuance. Subsidies are available at two levels:
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Half Grant (HK$1.25 million): Issuances must meet the Basic Requirements:
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Be issued in Hong Kong, with at least 50% of lead arrangers recognized for their substantial local operations.
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Utilize a Distributed Ledger Technology (DLT) platform operated by the Central Moneymarkets Unit (CMU) or involve a development team with a substantial Hong Kong presence.
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Full Grant (HK$2.5 million): Issuances must meet both the Basic and Additional Requirements, which include:
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Issuance on a non-affiliated DLT platform.
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A minimum issuance size of HK$1 billion equivalent (including all tranches, if applicable).
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Participation by at least five independent investors at issuance.
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Listing on the Hong Kong Stock Exchange (SEHK) or a virtual asset trading platform licensed by the Securities and Futures Commission (SFC).
These detailed criteria ensure that funded projects contribute meaningfully to Hong Kong’s financial ecosystem and meet the highest standards of technological and market credibility.
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Building a Tokenization Ecosystem
TWO
The DBGS does more than subsidize issuances; it strengthens Hong Kong's role as a financial innovation hub by fostering a comprehensive ecosystem. The scheme covers a wide range of expenses, including:
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Fees for Hong Kong-based arrangers, legal advisors, auditors, and accountants.
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Listing fees for SEHK or licensed virtual asset trading platforms.
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Costs associated with CMU lodging and clearing.
The scheme complements the Green and Sustainable Finance Grant Scheme, allowing issuers of green or sustainability-linked digital bonds to access additional funding. This dual approach bridges the gap between financial innovation and sustainability, positioning Hong Kong at the forefront of two critical global trends.
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Efficient and Transparent Process
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The DBGS is designed with efficiency in mind, offering a streamlined application process:
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Pre-application consultation (optional): Issuers can engage with the HKMA before formal submission to ensure eligibility.
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Formal application: Issuers, arrangers, or DLT platform providers can apply within three months of bond issuance.
The HKMA retains flexibility to refine the scheme based on market feedback, ensuring it stays aligned with evolving industry needs and technological advancements.
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