The HKMA is advancing tokenization through Project Ensemble with Brazil’s Drex pilot and Thailand’s Project San.
In order to demonstrate its commitment to tokenization, the Hong Kong Monetary Authority (HKMA) has been actively networking its Project Ensemble, which has resulted in the formation of new partnerships.
In addition to the Drex pilot project of the Central Bank of Brazil (CBB) and the Project San of the Bank of Thailand (BOT), the Ensemble initiative is currently collaborating with another initiative.
The Central Bank of Bangladesh (CBB) began accepting applications for the second phase of its Drex central bank digital currency (CBDC) pilot program midway through October, following its announcement in September. Tokenization is something that will be considered for further testing at Drex.
We will evaluate trade financing and carbon credit settlement use cases between Hong Kong and Brazil. These use cases will involve cross-border payment-versus-payment (PvP) and delivery-versus-payment (DvP) transactions.
At the moment, the HKMA has observed that the Drex project has more than 70 individuals participating in it. The Hong Kong Monetary Authority will test PvP and DvP settlements using the BOT. PvP is a mechanism for the settlement of monetary transactions, and DvP is a way to settle securities transactional disputes.
Developing a proof-of-concept will be the primary objective of the engagement with the BOT, which will also center on trade payments and carbon credits as its primary areas of concentration. The Hong Kong Monetary Authority (HKMA) reports that the BOT initiated Project San in the month of June.
According to Alisara Mahasandana, the deputy governor of corporate development for the BOT, the Hong Kong Monetary Authority (HKMA) established Project Ensemble in March with the intention of developing wholesale CBDC to enable tokenization.
“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.”
The architectural committee, which formed to discuss the infrastructure for the project, included financial institutions such as 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.
In June, the Hong Kong Monetary Authority (HKMA) involved the French central bank in the project, and in August, it initiated a sandbox.
While the Hong Kong Monetary Authority (HKMA) was in the process of launching Project Ensemble in February, it issued recommendations to financial institutions to help them solve gaps in tokenization regulation. During the month of November, the Hong Kong Securities and Futures Commission published various regulations regarding tokenized securities offerings.
