Regulatory Agency HKMA and SFC working as regulatory authorities in Hong Kong have joined forces with HSBC and HashKey. The coalition has been formed in order to discuss the possibility of tokenization in local markets.
The Monetary Authority of Hong Kong, which is the central bank of the region, is working with crypto industry participants to conduct research regarding tokenization.
HKMA announcement issued on 7th May indicates that it is putting together a committee made up of industry representatives and regulators in order to prepare a tokenization standard.
Project Ensemble Architecture Community
The program is called Project Ensemble Architecture Community. This committee will supervise and support the tokenization projects native to Hong Kong. The initiative is structured in a way that will promote and support interoperability for wholesale CBDCs.
According to these declarations, the community is focused on establishing a mechanism to enable seamless interbank settlement of tokenized deposits via wCBDC for tokenized asset transactions.
At the time of the launch, this project has added members from HKMA, the Securities and Futures Commission of Hong Kong, BIS Innovation Hub, and CBDC Expert Group. At the same time, Bank of China, HSBC, Standard Chartered Hong Kong, Ant Digital Technologies, Hang Seng Bank, and Microsoft Hong Kong have joined to represent the private sector.
Private and Public Sectors of Hong Kong Intend to Launch Tokenization Efforts
The coalition of the government agencies and private firms intends to combine efforts as a way to test and research tokenization and list all possible use cases. This project has been named Ensemble Sandbox.
The formation of this project is based on a series of factors such as expertise and share of tokenization market development in Hong Kong. At the same time, the committee will consider the experience and the qualification of participants in relevant fields.
HKMA spokesperson told the media that the central bank will work in tandem with industry and review the size and composition of the committee on an ad hoc basis. HKMA comments were issued a few months after the authority launched Project Ensemble to work on the local tokenization sector.
It is important to note that tokenization is the process of issuing a digital asset to denote the value of real-world things such as fiat, shares, commodities, property, and assets.
Blockchain-based real-world assets have become one of the leading trends in 2024 as investors look at new methods of portfolio diversification. As per expert projections, RWA tokenization may pave the way to ingrain innovations in various sectors and grow into a $16 trillion market in the next 6 years.
Bitcoin and Ethereum Spot ETFs Performance in Hong Kong
Bitcoin and Ethereum spot ETFs did not amass the same traction as American-issued ETFs. However, Cointelegraph reported that these products managed to amass around $200 million on the first day of launch in Hong Kong.
The data projections offered by Arkham Intelligence noted that Bosera HashKay spot and Ethereum ETFs have acquired 964 Bitcoins and 4290 Ethereum. The total AUM of the fund is estimated to be around $72 million.
Eric Balchunas, senior Bloomberg analyst, noted that Bitcoin and Ethereum ETFs issued by ChinaAMC reported a total inflow of $123.61 million on the first day of launch.
Hong Kong Stock Exchange is yet to update the asset management data from spot Bitcoin and Ethereum ETFs issued by Harvest Global. The sum of turnover for both these ETF issuers was reported to be around $23 million.
Bloomberg ETF analysts have noted that the inflows in digital asset ETFs in Hong Kong are significant based on the market participation. In the USA, the digital asset ETFs amassed $4 billion in AUM during the first 7-day of trading and reported an impressive $4.5 billion trading volume on 12th January marking the first day of Wall Street open.
Balchunas said that despite the conservative trading volumes, ChinaAMC Bitcoin ETF reached 6th rank among 32 ETFs launched during the last 3 years in Hong Kong and rose to become the Top 20% of all time.
