The Central Bank of Hong Kong forms a community to explore asset tokens.

The Hong Kong Monetary Authority (HKMA), the financial regulator, and the Hong Kong Central Bank are working with the industry to investigate asset tokens.

HMA officially announced on May 7 that it will form a special community of industry representatives and regulators to develop tokenization standards.

Called the “Project Collection Architecture Community,” the community aims to monitor and support tokenization projects in Hong Kong.

This initiative is designed to promote and support interoperability between wholesale central bank digital currencies (wCBDCs) – a form of digital currency used between banks and financial institutions.

According to the announcement, the community will initially focus on developing a mechanism to support seamless interbank distribution of tokenized deposits through wCBDC for financial transactions.

At launch, the project's collective architecture community includes regulators such as the HKMA, the Hong Kong Securities and Futures Commission, the BIS Innovation Center Hong Kong and the CBCC Expert Group.

The private sector is represented by seven members, including Bank of China (Hong Kong), Hang Seng Bank, HSBC, Standard Chartered Hong Kong, Hashkey Group, Ant Digital Technologies and Microsoft Hong Kong.

The companies and authorities are expected to jointly design and launch a project collection sandbox targeted to launch around mid-2024 to explore further research and token use cases.

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HKMA said in the announcement that “the formation of the community is based on various considerations, including the knowledge, experience and competence and competence of the members in the development of the tokenization market in Hong Kong. Adding:

“HKMA will work closely with the industry, and assess the size and composition of the community where appropriate.”

The HKMA announcement comes a few months after the authority first unveiled a set of projects to support the development of the Hong Kong token market.

Tokenization is the process of creating a digital representation of real-world objects such as fiat currencies, equities, commodities, real estate, and more. Blockchain-based real-world tokenization (RWA) has emerged as one of the key trends in 2024 as investors look for new ways to diversify their portfolios.

According to some predictions, RWA tokenization could transform several industries and grow to a $16 trillion market by 2030.

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