Originally published on: November 29, 2024
In an effort to promote tokenization in the capital markets, the Hong Kong Monetary Authority (HKMA) has introduced the Digital Bond Grant Scheme (DBGS). This initiative aims to subsidize up to 50% of the costs associated with issuing tokenized bonds, up to a specified amount.
Tokenization involves converting assets into digital tokens on a blockchain, with the goal of enhancing the efficiency and accessibility of capital market transactions. To be eligible for the grant, companies must meet certain requirements, including issuing the bonds digitally on a platform operated by the Central Moneymarkets Unit (CMU) and having a substantial presence in Hong Kong.
The DBGS began accepting applications on Nov. 28 and will be available for an initial period of three years. Companies can receive a full grant of up to $321,184 (2.5 million Hong Kong dollars) for two issuances, or opt for a half grant. The bonds must be issued at a minimum size of $128.5 million to five or more investors and be listed on the Stock Exchange of Hong Kong (SEHK) or a licensed platform.
The launch of the DBGS follows the issuance of $100 million in tokenized green bonds under Hong Kong’s Green Bond Programme. With the global tokenized bond market growing rapidly, the HKMA is committed to supporting the adoption of this technology through incentives like the DBGS.
In addition to the DBGS, Hong Kong is exploring tax exemptions for crypto investments to further solidify its position as a leading financial hub for cryptocurrencies. As the market continues to evolve, initiatives like the DBGS and tax exemptions aim to encourage innovation and growth in the digital asset space.
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