The Hong Kong Monetary Authority has released a detailed report listing the benefits of bond tokenization, using the findings of its Project Evergreen.
The Hong Kong Monetary Authority (HKMA) is known in the crypto space for pro-industry initiatives. In the last few months, it has implemented many decisions favoring crypto. Once again, the regulator is in the news for a trending subject: bond tokenization.
HKMA had been conducting Project Evergreen, which explored the various facets of tokenization in the bond market. HKMA has released a report on its findings after the project has concluded. It listed the advantages, applications, and challenges of the tokenization of bonds. But in conclusion, it noted how tokenization would broadly only benefit the bond market.
“Despite the increasing number of issuances globally in recent years, bond tokenization is still at its infancy; multiple challenges would have to be overcome for it to be widely adopted. As more financial institutions come up with their own tokenization solutions, it will be crucial to consider how different solutions can connect and interact with each other as well as conventional systems to avoid fragmentation,” said the Chief Executive of HKMA, Eddie Yue.
The report included paperless operations, better transparency, and common interaction on a DLT platform as its benefits. Yue also noted how various tokenization solutions by multiple organizations were essential. All such solutions could be used to connect to each other and traditional systems.
He also stated how legal and regulatory rules must be modified to ensure its adoption.