Hong Kong, Singapore, Japan regulators welcome tokenisation push, call for closer alliance with private sector
- CEO of Hong Kong market watchdog welcomes ‘responsible innovation’, with similar standard of investor protection or higher than traditional products
- Experts at McKinsey say tokenisation has the benefits of round-the-clock operations, data availability, and instantaneous settlement, as well as greater automation.
Regulators in three of the biggest financial markets in Asia said they welcome tokenised securities – traditional investment products like stocks, bonds and mutual funds that use distributed ledger technology- as a means to promote efficiency, disintermediation, liquidity and financial inclusion in markets. They also called for closer partnership with the private sector.
Representatives from the Hong Kong Securities and Futures Commission (SFC), Monetary Authority of Singapore (MAS) and Financial Services Agency of Japan (JFSA) shared their experience in dealing with the growing interest in tokenising financial instruments under the principle of “same business, same risks, same rules” at the annual conference of Asia Securities Industry & Financial Markets Association (ASIFMA) on Thursday in Hong Kong.
“We set very clear expectations, and we welcome the industry to come and discuss with us [about] their novel products,” said Julia Leung, SFC’s CEO. “I believe the SFC’s work on these conduct requirements and due diligence requirements are quite pioneering in this area.”
The use of distributed ledger technology, in which products are recorded, transferred and settled on the blockchain, has received government endorsement in Hong Kong with the release of two circulars last November that outlined requirements for tokenised securities.
The documents are aimed at opening up retail investors’ access to such products provided they follow specific guidelines, such as notifying and discussing business plans with the SFC in advance and conducting smart contract audits.
Analysts have forecast that US$4 trillion to US$5 trillion of tokenised digital securities could be issued by 2030, according to a report from consultancy McKinsey & Co.
