HKSAR Government’s Inaugural Tokenised Green Bond Offering

The Financial Stability Board (FSB) has revealed that many stablecoins will not meet the standards stipulated in its recommendations for crypto asset regulations that will be released later this year. The regulator noted that the recommendations would be aimed at maintaining effective “stabilization” mechanisms and strengthening redemption rights.
The FSB is a global organization that oversees and provides guidance on the stability and resilience of the international financial system. The watchdog was created by the G20 countries as a replacement for the Financial Stability Forum in 2009 after the 2008 financial crisis.
FSB to Release Stablecoin Recommendations
According to an official document published Monday, the FSB believes tighter regulations are crucial to the crypto sector, considering the number of high-profile scandals that shook the industry last year.
“The events of the past year, such as the collapse of FTX, have highlighted the intrinsic volatility and structural vulnerabilities of crypto-assets. We have now seen first-hand that the failure of a key intermediary in the crypto-asset ecosystem can quickly transmit risks to other parts of that ecosystem,” the financial watchdog said.
The regulatory effort aligns with an announcement made last year about the FSB’s intentions to set out a timeline for global crypto regulators in 2023. The recommendations aim to curtail the effect of crypto asset implosion on the broader financial system.
A core aspect of the regulatory framework is focused on stablecoins. And the Terra-Luna $40 billion ecosystem collapse in May has already dented the reputation of such assets.
The FSB now seeks to strengthen global stablecoin governance frameworks, as such assets have characteristics that could worsen threats to financial stability.
Many Stablecoins May Not Meet the FSB’s Standards
Although the recommendations are yet to be released, the FSB has already concluded that many existing stablecoins would not meet the stipulated “high-level” standards, let alone detailed rules to be set by sectoral bodies.
“Importantly, the FSB’s work concludes that many existing stablecoins would not currently meet these high-level recommendations, nor would they meet the international standards and supplementary, more detailed BIS Committee on Payments and Market Infrastructures-International Organization of Securities Commission’s guidance,” the FSB added.
Furthermore, the FSB intends to publish a joint paper with the International Monetary Fund (IMF) to synthesize the outcome of policy findings on crypto assets.
Upon completion of the work, the FSB will coordinate the regulation of cryptocurrencies on the principle of “same activity, same risk, same regulation.”



The Government of the Hong Kong Special Administrative Region of the People’s Republic of China (the HKSAR Government) today (16 February) announced the successful offering of HK$800 million of tokenised1 green bond (the Tokenised Green Bond) under the Government Green Bond Programme (GGBP). This is the first tokenised green bond issued by a government globally.
Following a virtual roadshow earlier this week, the one-year2, HKD-denominated Tokenised Green Bond was priced yesterday at 4.05%. It was distributed by a four-bank syndicate, two of which also act as investor custodians. The Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority (HKMA) is the clearing and settlement system for the bond, leveraging Goldman Sachs’ tokenisation platform – GS DAPTM.
The primary issuance was settled on a delivery-versus-payment (DvP) basis between securities tokens3 representing beneficial interests in the bond and cash tokens representing a claim for HKD fiat against the HKMA, on a T+1 basis across a private blockchain network. Processes of the bond lifecycle, including coupon payment, settlement of secondary trading and maturity redemption, will also be digitalised and performed on the private blockchain network.
The Tokenised Green Bond is cleared and settled through the CMU, and the settlement of transactions made through the CMU benefits from statutory settlement finality under Hong Kong law. The on-chain records on the private blockchain network will be the legally definitive and final records of ownership of the securities tokens and cash tokens for the parties on the platform.
As the first tokenised bond governed by Hong Kong law, the offering demonstrates that Hong Kong’s legal and regulatory environment is flexible and conducive to innovative forms of bond issuances. The HKMA, as the HKSAR Government’s representative under the GGBP, will issue a whitepaper in due course to summarise the experience learnt from this issuance, set out the next steps and provide a blueprint for issuing tokenised bond in Hong Kong.
Mr Paul Chan, the Financial Secretary, said, “Hong Kong has been proactively promoting the application of innovative technologies in the financial field, and is actively exploring new concepts and technologies to enhance the efficiency, transparency and security of financial transactions. Our Policy Statement on Development of Virtual Assets in Hong Kong issued in October last year sets out that we actively embrace financial innovations related to Web3 and promote steady and prudent market development. The successful issuance of this tokenised green bond marks an important milestone as it demonstrates Hong Kong’s strengths in combining bond market, green and sustainable finance as well as fintech. The HKSAR Government will continue to promote the innovative development of the financial market.”
Mr Christopher Hui, the Secretary for Financial Services and the Treasury, said, “Green bond tokenisation is one of the pilot projects announced in the Government’s Policy Statement on Development of Virtual Assets in Hong Kong. Through a clear policy stance and roadmap, the Government will work towards providing a facilitating environment to promote sustainable and responsible development of the virtual assets sector. We welcome market participants to conduct tokenised issuances in Hong Kong.”
Mr Eddie Yue, Chief Executive of the HKMA, said, “Distributed ledger technology (DLT) holds promise for revolutionising the operation of the financial markets. Building on Project Genesis concluded by the HKMA and the Bank for International Settlements Innovation Hub Hong Kong Centre in 2021, the Tokenised Green Bond issuance with on-chain DvP settlement using cash tokens issued by the HKMA is an important step forward in promoting the adoption and realisation of the full potential of DLT in the bond market. Building on the experience from this issuance, the HKMA and the Government will work with other stakeholders to conduct further tokenised issuances to push the boundary and encourage usage.”
Mr Sun Yu, Vice Chairman and Chief Executive of Bank of China (Hong Kong), said, “Bank of China (Hong Kong) is honoured to be one of the Joint Global Coordinators, Joint Lead Managers and Bookrunners as well as Custodians for HKSAR Government’s first tokenised green bond issuance. It demonstrates our commitment to deploy cutting-edge technologies to promote green and sustainable finance in Hong Kong and our persistent support for HKMA’s green bond initiatives. This issuance has drawn strong interest from institutional investors and serves as a testament to the diversity and innovativeness of Hong Kong’s financial market. We believe that the evolution of virtual assets and its integration into the Government Green Bond Programme will further solidify the city’s leading position as a green and sustainable finance hub in the Asia-Pacific region.”
Mr Edouard O’Neill, Chief Executive Officer, Hong Kong Branch & Head of Structured Finance Asia of Crédit Agricole Corporate & Investment Bank, said, “Crédit Agricole CIB is delighted to have the opportunity to partner with the Hong Kong Monetary Authority (HKMA) on the Hong Kong SAR Government’s inaugural tokenised green bond offering. This issuance marks a significant breakthrough in the capital market innovation for Hong Kong and lays a solid foundation for asset digitisation for the other market participants in the region. We are honoured to support the ongoing initiatives to promote the city’s green finance and fintech developments.”
Mr Max Minton, Asia Pacific Head of Digital Assets at Goldman Sachs, said, “This bond is a testament to the HKMA’s leadership and innovation in green finance, and marks another significant milestone in the digitalisation of capital markets. We are excited to play a key role in this landmark issuance which utilises Goldman Sachs’ tokenisation platform, GS DAPTM, to contribute to increased efficiency and digitisation across debt issuances.”
Ms Luanne Lim, Chief Executive Officer, HSBC Hong Kong, said, “We are proud to continue our longstanding support to the Hong Kong SAR Government’s green bond programme through this debut sale of digital green bonds. This deal marks a significant step towards capital markets innovation, and showcases the transformative potential of tokenisation in the bond issuance and asset servicing process. We look forward to continuing our close collaboration with the Hong Kong Monetary Authority and our industry peers in solidifying Hong Kong’s position as a regional green finance and fintech hub.”
Mr Rajeev Mittal, Managing Director, Asia Pacific ex-Japan, Fidelity International, said, “We are delighted to participate in this innovative issuance on behalf of our clients, a huge first step for Hong Kong and for digital assets adoption. We fundamentally believe that distributed ledger technology has the potential to transform financial markets for the better, from democratising access to financial services, to cheaper and more diversified investing through tokenisation.”
The Tokenised Green Bond was issued under the Green Bond Framework of the HKSAR Government. Vigeo Eiris has provided a Second Party Opinion for the Green Bond Framework. The Tokenised Green Bond has also received the Green and Sustainable Finance Certificate (Pre-issuance Stage) from the Hong Kong Quality Assurance Agency.