FSTB and HKMA to further unlock potential of distributed ledger technology in Hong Kong's fixed income market

On Mon, 29 Jun, the Financial Services and the Treasury Bureau ("FSTB") and the Hong Kong Monetary Authority ("HKMA") jointly concluded the initial phase of their review regarding the further adoption of distributed ledger technology ("DLT") in Hong Kong's fixed income market. Findings indicate that Hong Kong's legal and regulatory environment is already sufficiently flexible for tokenised bond issuances.

First-phase findings and enhancements

The FSTB and HKMA thanked industry stakeholders, including the HKMA Tokenised Bond Expert Group, noting that the Government's three landmark issuances and a growing pool of corporate issuers from Asian and Middle Eastern entities demonstrate this flexibility. However, the review identified specific legal issues worthy of further clarification to facilitate DLT applications in the fixed income market.

Issuing clarifications on DLT record keeping

As a first step, the Companies Registry ("CR") issued FAQs to affirm that a register of debenture holders maintained using DLT fulfills record-keeping requirements under the Companies Ordinance (Cap. 622), providing market certainty.

Next phase

The FSTB and HKMA will embark on the next phase of the review in the second half of this year to explore necessary flexibilities and legislative changes for a future-ready ecosystem facilitating the extensive use of DLT in the fixed income market and digital assets more broadly.

Specifically, the review will examine legal enhancements for current fixed income processes and digitally native concepts, including allowing electronic execution of issuance documents to enable efficiency, such as recognising electronic signatures for trust creation in tokenised bonds and funds.

The review will also consider concepts such as possession and transfer in the context of tokenised fixed income instruments to provide issuers flexibility as technology advances, while taking reference from the Government's broader digitalisation initiatives.

Mr Christopher Hui, Secretary for Financial Services and the Treasury, stated that a clear and robust regulatory framework provides a solid foundation for the sustainable development of the digital asset sector. Following the release of the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong (Policy Statement 2.0) in June 2025, this review represents another critical step forward in unlocking the full potential of DLT in the fixed income market.

Mr Eddie Yue, Chief Executive of the HKMA, said Hong Kong is a leader in advancing technology adoption in the bond market. He noted the Government issued three landmark tokenised bond issuances, with the latest in November 2025 being the world's largest digital bond at the time and the first to integrate tokenised central bank money in the form of e-HKD and e-CNY.

The review was first announced in the 2025-26 Budget, while the Policy Statement 2.0 was published by the FSTB in June 2025. The 2026-27 Budget further sets out the directions of the review.