Hong Kong’s central bank, the Hong Kong Monetary Authority (HKMA), has unveiled “Project Ensemble,” a new initiative designed to bolster the tokenization market within the city-state through the introduction of a wholesale central bank digital currency (wCBDC).
Through “Project Ensemble,” the HKMA aims to investigate financial market infrastructure that facilitates smooth interbank settlement of tokenized money using wCBDC. Initially, the focus will be on tokenized deposits, representing digital versions of commercial bank deposits issued by banks and accessible to the public.
By leveraging wCBDC, these tokenized deposits can be utilized in transactions involving tokenized assets, opening doors for optimization and innovation in the tokenization realm. Eddie Yue Wai-man, Chief Executive of the HKMA, emphasized the project’s potential to elevate Hong Kong’s dynamic financial industry and solidify its position as a leader in tokenized money and assets.
The HKMA plans to establish a wCBDC Sandbox later this year to facilitate research and testing of various tokenization use cases, including settlements involving tokenized real-world assets such as green bonds, carbon credits, and treasury management. The objective is to bridge the gap between tokenized real-world assets and money in transactions, potentially shaping a new financial market infrastructure.
To ensure adherence to industry standards and a forward-thinking approach, the HKMA will create a wCBDC architecture community comprising local and multinational banks, digital asset industry leaders, technology firms, and the CBDC Expert Group. Additionally, collaborations with Cyberport and the Hong Kong Science and Technology Parks Corporation will continue to support the development of asset tokenization and foster local fintech innovation.
Meanwhile, the recent conclusion of Hong Kong’s crypto license scheme saw 24 virtual asset trading platform (VATP) crypto license applications, with five submissions made in the final days leading up to the deadline. Cryptocurrency exchanges yet to apply must exit the Hong Kong market by May 31. The SFC will publicly announce approved and declined applications by June 1, 2024, allowing licensed platforms to onboard new retail and institutional crypto investors and commence marketing activities in Hong Kong.