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Hong Kong Monetary Authority Opens Its Tokenization Sandbox and Major Institutions Dive In

  • The Hong Kong Monetary Authority opened up its tokenization "Project Ensemble" sandbox on Wednesday.
  • Major institutions including HSBC and Global Shipping Business Network have already begun testing proofs of concept and HashKey Group plans to join the sandbox.
  • The project is meant to future-proof the financial system, Julia Leung, chief executive officer of the Securities and Futures Commission, said.

The Hong Kong Monetary Authority (HKMA) opened up its tokenization sandbox "Project Ensemble" on Wednesday and major institutions including HSBC have already begun testing proof of concepts.

The sandbox is meant to "build the grand architecture for Hong Kong’s tokenization market and connect all essential pieces in order for tokenized transactions to achieve scale and settle at warp speed," Julia Leung, the CEO of the Securities and Futures Commission, said in a speech at the launch on Wednesday. It is meant to help "future-proof" the financial system she added.

HSBC bank completed three proof-of-concept use cases with the sandbox, according to an emailed statement.

The tests included a purchase of digital bonds issued on HSBC Orion , a platform by the bank that can settle and record digital bonds. The purchase used tokenized deposits recorded on HSBC’s ledger.

It also tested interbank transfer of tokenized deposits between HSBC and Hang Seng Bank and settlements of electronic bills of lading (eBL) by working with blockchain company Ant Digital Technologies and the Global Shipping Business Network (GSBN).

"The tokenization of the eBL, a critical document underpinning global trade and serving as a means of legally transferring the title of goods, will for the first time pave way to the securitization of global physical shipping flows," GSBN said in an emailed statement.

HashKey Group a digital asset financial services group in Asia also said it will conduct pilots exploring the tokenization and trading of real world assets in a recent press release .

CORRECTION (Aug. 29 08:31 UTC): Corrects full name of HKMA to Hong Kong Monetary Authority; adds that sandbox's full name is Project Ensemble.