Hong Kong Launches Third Tokenised Bond With 24/7 Trading And Stamp Duty Exemption

Hong Kong is taking significant steps to solidify its position as a global digital asset hub with the launch of its third tokenised bond. This new issuance includes a stamp duty exemption for tokenised ETFs, which is expected to create cost advantages for investors. The move is part of a broader strategy to expand the tokenisation of real-world assets, including precious metals, non-ferrous metals, and solar panels.

The journey towards this milestone began in 2021 with “Project Genesis,” a proof-of-concept initiative with the Bank of International Settlements to explore tokenised green bonds. The first tokenised green bond, worth HK$800 million, was issued in February 2023, followed by a multi-currency digital bond totaling HK$6 billion in HKD, RMB, USD, and EUR in February 2024. These initiatives laid the groundwork for the third issuance, which now includes tax exemptions and the expansion of tokenised assets.

The third tokenised bond introduces several key features. Tokenised ETFs will be exempt from stamp duty, providing a financial incentive for investors. Additionally, the tokenisation process will now include precious metals, non-ferrous metals, and solar panels, enabling fractional ownership and 24/7 access to traditionally illiquid asset classes. This expansion opens new opportunities for global investors, enhancing liquidity and efficiency in bond and asset markets.

The benefits of this strategy are multifaceted. Fractional ownership allows more investors to participate in high-value markets, while 24/7 trading brings liquidity and efficiency. The stamp duty exemption offers a financial incentive to invest in tokenised ETFs, and the broader asset tokenisation supports market democratisation. However, Hong Kong must navigate several challenges, including integrating blockchain infrastructure with traditional financial systems, ensuring the resilience and scalability of blockchain platforms, and addressing regulatory complexities related to investor protection, KYC/AML compliance, and risk management.

With tax incentives and an expanding scope of tokenised offerings, Hong Kong is setting the stage for the next phase of digital finance. The success of this strategy will depend on how well it aligns with international regulations and scales secure blockchain infrastructure for global adoption. The region's commitment to becoming a global digital asset hub is evident in its efforts to push toward a Web3 future, with 24/7 trading, fractional ownership, and tokenised ETFs. This strategic move aims to solidify Hong Kong’s position as a global digital asset hub, attracting investors and fostering innovation in the digital finance sector.