The Hong Kong Monetary Authority (HKMA) has unveiled a new subsidy initiative, the Digital Bond Grant Scheme (DBGS), to encourage the adoption of tokenized bonds in the city’s capital markets.
According to a statement published by the financial regulator, the scheme will offer grants covering up to 50% of eligible expenses related to digital bond issuances, with a cap of $321,184 (2.5 million Hong Kong dollars) per issuance.
The program, set to run for three years, is part of Hong Kong’s broader effort to integrate tokenization technology into its financial ecosystem. Companies can apply for either a full or half grant, depending on the size and structure of their bond issuances.
To qualify for the half grant, bonds must be digitally issued via the Central Moneymarkets Unit (CMU) and involve companies with a substantial presence in Hong Kong. The full grant, however, requires a minimum issuance size of $128.5 million, participation by at least five investors, and listing on the Stock Exchange of Hong Kong (SEHK) or a platform licensed by the city’s financial regulator.
HKMA Chief Executive Eddie Yuestated that the DBGS stems from Project Evergreen, a research initiative launched in 2021 to explore distributed ledger technology for financial markets. Yue noted that while tokenization has gained momentum globally—with over $10 billion worth of tokenized bonds issued in the past decade—many issuers still face adoption hurdles. The DBGS aims to address these challenges and accelerate market participation.
This announcement comes as Hong Kong introduces tax exemptions for private equity funds, hedge funds, and high-net-worth investors. These exemptions will apply to profits derived from cryptocurrencies, private credit, and alternative assets such as carbon credits and overseas property.
In a 20-page proposal detailed by the government, tax policies are highlighted as a critical factor influencing where asset managers choose to operate. By implementing favourable tax reforms, Hong Kong aims to create a competitive and attractive environment to draw more asset managers to its financial ecosystem.
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