Bank of China Boosts Hong Kong Crypto With Tokenised Security

Bank of China through its Hong Kong-based international investment arm has released a tokenised security in the city, which is seeking to become a global crypto hub through a regulatory regime that went into effect this month.

The bank became the first mainland financial institution to release such a financial product using a public blockchain, a technology strictly banned in mainland China.

Hong Kong-based Bank of China International Holdings (BOCI) issued 200 million yuan ($28m, £22m) of fully structured digital notes in the form of tokens on the Ethereum blockchain, said a Monday statement from Swiss investment bank UBS, which created the product and placed it with Asia-Pacific clients.

The new product, constituted under Hong Kong and Swiss law, follows UBS’ first tokenised security in December in the form of a $50m fixed-rate note.

Digital assets

“We are driving the simplification of digital asset markets and products,” said Ying Wang, BOCI’s deputy chief executive, in a statement.

“We are encouraged by the evolution of Hong Kong’s digital economy and are committed to promoting the digital transformation and innovative development of Hong Kong’s financial industry.”

Bank of China (Hong Kong) was one of the global coordinators of a February issuance by the Hong Kong government of tokenised green bonds worth 800 Hong Kong dollars (£82m), in the first sale of its kind.

The moves are a positive sign for Hong Kong’s crypto ambitions, with the Chinese-controlled city working since October to introduce a regulatory regime that went into effect this month.

Regulatory clarity

The city is seeking to attract crypto firms that are expressly banned from operating on the mainland and face an uncertain environment in the US, where they are regulated under existing financial laws and lack a dedicated regulatory infrastructure.

This month the US Securities and Exchange Commission (SEC) sued both Binance and Coinbase, the two biggest crypto exchanges by trading volume, for selling unregistered securities in the country.

By contrast, days later Hong Kong legislative council member Johnny Ng invited exchanges “including Coinbase” to register as official trading platforms in the city.