Hong Kong Issues Third Tokenized Bond, Exempts ETFs from Stamp Duty

Hong Kong has announced the issuance of its third tokenized bond, marking a significant step in its digital finance agenda. This move is accompanied by a stamp duty exemption for exchange-traded funds (ETFs), aimed at enhancing market accessibility and reducing trading costs. The bond, launched by the Financial Services and the Treasury Bureau alongside the Hong Kong Monetary Authority, aligns with previous initiatives that emphasize Hong Kong’s commitment to digital finance development.

Christopher Hui, the Financial Secretary, highlighted that the bond issuance is a continuation of past successful tokenized green bonds issued at the end of 2023 and 2025. These previous issuances have laid a strong foundation for regulatory adaptation and leveraged major blockchain platforms like Ethereum. The current bond issuance is expected to further deepen market integration and enhance digital asset offerings across various sectors, driven by Hong Kong’s evolving digital finance policies.

The stamp duty exemption for tokenized ETFs is designed to foster retail investor participation by reducing trading costs. This move is anticipated to increase liquidity and attract both institutional and individual investors. The fractional ownership and 24/7 trading capabilities of tokenized assets extend accessibility to a diverse range of financial products, bolstering Hong Kong’s competitive edge in the global digital market.

Hong Kong’s financial authorities are working to create a regulated environment that supports the growth of tokenized financial products. The Hong Kong Monetary Authority and the Securities and Futures Commission are overseeing the licensing and supervision of activities related to tokenization, ensuring a secure and compliant framework for digital asset growth. The region is also exploring the tokenization of real-world assets such as precious metals and investment products, which is expected to open up more liquid and convenient investment avenues in traditionally less-liquid markets.

The government will begin licensing stablecoin issuers starting August 1, with the Securities and Futures Commission supervising digital asset dealers and custodians. The Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority will handle the legal review of tokenized assets. This focus on both legal clarity and technical readiness underscores the region's strategic effort to support tokenized products and encourage participation from both local and overseas market participants.

The integration of these initiatives aligns with global trends in tokenized assets. Hong Kong’s efforts to promote digital economy and financial innovation are likely to attract more investors and fintech companies, further solidifying its position as a leading hub for tokenized financial products. The region’s commitment to enhancing investment options and encouraging institutional participation in tokenized financial markets is expected to drive the growth of the digital asset market.