Hong Kong issues multi-currency digital bonds to strengthen its position as a global crypto hub through institutional innovation

On November 10, 2025, the Hong Kong SAR government announced the launch of the third round of digital bond issuance. This “digitally native” bond will be denominated simultaneously in USD, HKD, EUR, and offshore RMB, with pricing expected to be completed on the same day. The issuance continues the tokenized bond framework established in Hong Kong in 2024 and introduces a hybrid issuance model—part of the bonds will be issued via public blockchains such as Ethereum, while the rest will be issued through distributed ledger technology (DLT) platforms provided by HSBC and Goldman Sachs. S&P Global Ratings has assigned an AA+ rating to this batch of bonds, confirming their credit quality as equivalent to traditional bonds, and noted that in the event of blockchain system failure, contingency plans are in place to transfer to traditional settlement systems.

Issuance Details and Technological Innovation

The multi-currency structure reflects Hong Kong’s position as an international financial center. In this issuance, USD bonds are expected to account for 40%, offshore RMB 30%, HKD 20%, and EUR 10%. This allocation meets the needs of international investors and promotes RMB internationalization. Notably, the offshore RMB portion will be directly compatible with the digital RMB wallet launched by the Hong Kong Monetary Authority, setting a precedent for future interactions between central bank digital currencies (CBDCs) and tokenized bonds.

The choice of blockchain technology is diverse. Ethereum primarily targets retail investors and crypto-native institutions, while HSBC’s Hex Trust and Goldman Sachs’ GS DAP platform serve traditional financial institutions. This hybrid architecture ensures deep liquidity and regulatory compliance. Technical documentation indicates that the bond tokens conform to the ERC-3475 standard, supporting multi-layer interest structures and complex redemption terms.

The issuance process has achieved a qualitative leap in efficiency. Compared to traditional bond issuance settlement cycles averaging 5-7 working days, this digital bond issuance achieves T+1 settlement, with some simple structured products settling on the same day. This efficiency gain is mainly due to smart contracts automating subscription, allocation, and clearing processes, reducing manual intervention.

Market Context and Regulatory Progress

Hong Kong’s bond market leadership continues to strengthen. As of September 2025, Hong Kong accounted for 30% of Asia’s international bond issuance, maintaining the top regional position for nine consecutive years. Prior to this digital bond issuance, Hong Kong companies had issued four digital notes this year, raising a total of $1 billion, demonstrating strong market demand for digital financing channels.

The regulatory framework is becoming more comprehensive to support market development. The Securities and Futures Commission (SFC) updated guidelines on November 8, clarifying that digital bonds can be classified as “debt securities” under the Companies Ordinance. Meanwhile, the Hong Kong Monetary Authority issued custody guidelines for tokenized bonds, addressing technical barriers faced by traditional financial institutions. This regulatory clarity positions Hong Kong ahead of Singapore and Dubai in the digital asset regulation race.

Institutional adoption is accelerating. Franklin Templeton launched Hong Kong’s first tokenized money market fund on November 7, while BlackRock and State Street are testing secondary trading systems for tokenized bonds. These developments provide robust infrastructure and deep liquidity support for the digital bond market.

Economic Benefits and Risk Management

Issuance costs are significantly reduced. Compared to traditional bonds’ issuance fees of 2-3%, digital bonds, with smart contracts automating execution, cut costs to below 0.5%. For a planned issuance of $500 million, this could save approximately $7.5 million in issuance costs.

Enhanced liquidity creates a premium. Digital bonds can be traded 24/7 on compliant decentralized exchanges, offering liquidity advantages that typically translate into a 0.1-0.15% liquidity premium over traditional bonds. Market maker Wintermute has committed to providing two-sided quotes for this issuance, ensuring secondary market liquidity.

Contingency mechanisms ensure system robustness. S&P specifically praised the fallback plan—if the blockchain system experiences a major failure, bonds can be transferred to the Hong Kong Central Clearing and Settlement System (CCASS) within three working days. This design effectively addresses regulatory concerns about technical risks and paves the way for larger-scale issuances.

Strategic Significance and Regional Competition

Construction of crypto hubs enters a new phase. Hong Kong is systematically building a digital financial ecosystem through digital bonds, tokenized funds, and virtual asset exchanges. This comprehensive approach positions Hong Kong ahead in the Asia-Pacific digital finance race, with an expected digital asset custody scale of $15 billion by 2026.

The Greater Bay Area’s synergistic effects are gradually emerging. Hong Kong and Shenzhen signed a fintech cooperation memorandum on November 5, explicitly supporting cross-border digital bond pilot transactions. This regional collaboration could provide a potential investor base from mainland China, unlocking a trillion-dollar market.

Hong Kong’s influence in setting global standards is strengthening. The HKMA, in collaboration with the Bank for International Settlements (BIS), is developing the “Genesis 2.0” project, which aims to distill the experiences from this issuance into global standards for digital securities. This technological leadership shifts Hong Kong from a rule follower to a rule maker, significantly enhancing its international financial influence.

Conclusion

The issuance of multi-currency digital bonds in Hong Kong marks a deepening integration of traditional finance and blockchain technology. This innovation not only improves market efficiency and reduces financing costs but also reshapes Hong Kong’s competitive landscape as an international financial center. Against the backdrop of accelerating digital economic development, Hong Kong’s systemic institutional innovations are transforming it from a traditional financial bridge into a digital financial infrastructure hub. This transformation offers valuable insights for global financial centers and opens new strategic pathways for China’s international digital finance competition.