Hong Kong's Finance Minister Paul Chan Outlines Strategy Focusing on Digital Securities and Tokenization through Project Ensemble.
Hong Kong's Finance Minister Paul Chan outlined plans for the second phase of the digital asset innovation initiative in a blog post last weekend, marking a new step after the first crypto asset policy statement in 2022. The future strategy is expected to focus on digital securities and tokenization, with the aim of combining traditional financial service advantages with blockchain technology innovation.
Chan said the next steps will "combine the advantages of traditional financial services with technological innovation in the digital asset field, to enhance the safety and flexibility of digital assets in real economic activities." The government also committed to continuing to support innovation from both domestic and foreign companies.
The focus of the new phase may revolve around Project Ensemble, an experimental project launched by the Hong Kong Monetary Authority. Within this project, financial institutions are testing wholesale CBDC for interbank payments, tokenized deposits, and various asset tokenization applications.
Project Ensemble Expands to Green Finance
Financial applications in Project Ensemble include bond and fund issuance, repo trading, and corporate treasury management. Specifically, the project is also testing green financial solutions such as carbon credit tokenization and supply chain tokenization, including electronic bills of lading.
Participating test parties include major names like HSBC, JP Morgan, Standard Chartered, along with international corporations BlackRock and Franklin Templeton. Meanwhile, many large Chinese organizations and enterprises are also participating through their Hong Kong subsidiaries, showing regional spillover effects.
Chan emphasized Hong Kong's pioneering role as a "buffer zone" and "testing ground" for mainland China, in line with the "one country, two systems" principle. He wrote that "this reflects our role as a 'firewall' and 'test area', while providing experience and reference for the country's financial development."
A notable point in the message is Hong Kong's support for stablecoin issuance pegged to foreign currencies, a still-sensitive direction in mainland China. This shows that Hong Kong is leveraging its special status to test new financial models before potentially broader application.
Legally, 10 crypto asset trading platforms have been licensed by the Securities and Futures Contract Commission, with 8 other platforms awaiting review. The total trading volume of digital assets and related products from local banks in 2024 reached 17.2 billion HKD, equivalent to 2.2 billion USD.
ZA Bank became the first institution to deploy retail crypto trading services in late November 2024. By the end of 2024, banks in Hong Kong were custodying a total of 5.1 billion HKD, equivalent to 650 million USD in digital assets, including institutional digital asset transactions such as DLT-based government bonds and crypto transactions related to the payment system.
