The Hong Kong Monetary Authority (HKMA) has been networking its tokenization-focused Project Ensemble and has new collaborations to show for it.
Project Ensemble is being linked with the Central Bank of Brazil’s (CBB) Drex pilot project and the Bank of Thailand’s (BOT) Project San.
Uniting tokenization projects around the world
The CBB announced the second phase of its Drex central bank digital currency (CBDC) pilot program in September and began accepting applications for it in mid-October. Tokenization is on the agenda for further Drex testing.
Cross-border payment-versus-payment (PvP) and delivery-versus-payment (DvP) trade finance and carbon credit settlement use cases will be tested between Hong Kong and Brazil. The HKMA noted that the Drex project has more than 70 participants at this time.
The HKMA will also test PvP and DvP settlements with the BOT. PvP is a method of monetary transaction settlement, and DvP is a settlement method for securities.
Trade payments and carbon credits will also be the focus of the collaboration with the BOT, with the goal of developing a proof-of-concept.
According to the HKMA, the BOT launched Project San in June. BOT deputy governor of corporate development Alisara Mahasandana said:
“This partnership will significantly advance tokenisation efforts […] by offering broader insights into tokenisation, as different technical designs, business requirements, and regulatory frameworks of each jurisdiction will be taken into account."
Related: Brazilian securities regulator plans sandbox for tokenization in 2024
Hong Kong is trailblazing tokenization
The HKMA launched Project Ensemble in March to develop wholesale CBDC to support tokenization. It convened an architecture committee to consider the infrastructure for the project that included Bank of China (Hong Kong), Hang Seng Bank, Hong Kong and Shanghai Banking Corporation (HSBC), Standard Chartered Hong Kong, HashKey Group, Ant Digital Technologies and Microsoft Hong Kong.
Source: HKMA
The HKMA onboarded the French central bank to the project in June and launched a sandbox in August.
In February, prior to launching Project Ensemble, the HKMA issued guidance for financial institutions to close gaps in tokenization regulation. The Hong Kong Securities and Futures Commission issued rules for tokenized securities offerings in November.
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