Allen & Overy (A&O) has advised the Hong Kong Monetary Authority (the HKMA) on the deployment of distributed ledger technology (DLT) in real capital markets transactions – culminating in the launch of the HKMA’s report on “Bond Tokenisation in Hong Kong”, which discussed the design and issuance considerations and reflects the unique features of Hong Kong’s financial market. This contribution marks another milestone in the exploration and promotion of wider adoption of bond tokenisation in Hong Kong.
A&O’s extensive legal and regulatory analysis on the first-ever HKD800 million tokenised green bond issuance by the HKSAR (the Hong Kong Special Administrative Region of the People’s Republic of China) Government in February 2023 (Project Evergreen) facilitated integration of DLT in financial transactions under Hong Kong’s largely technology-neutral legal and regulatory environment.
This experience paved the way for A&O partner Agnes Tsang and her team to explore possible future scenarios to support technological innovation in digital and tokenised assets while managing relevant legal risks. The report focuses on areas including Hong Kong’s legal and regulatory regime for digital bonds, deal structuring considerations and the potential of DLT in bond markets.
Partner Agnes Tsang said: “The tokenisation journey is becoming increasingly dynamic and DLT has shown huge potential in enhancing efficiency, liquidity and transparency in capital markets transactions. It has been a privilege to work collaboratively with the HKMA and the various participants in Project Evergreen. Our team tested the tokenisation concept and are very excited to share our experience and expertise on how to integrate tokenisation into the legal and regulatory framework for potential wider adoption in Hong Kong.”
A&O will continue to consider how different innovative tokenisation solutions can be deployed in future transactions in compliance with the legal and regulatory regime for digital assets across the world.
