Hong Kong issues Green Bonds on the Blockchain

Hong Kong has joined the trend of tokenizing financial assets on the blockchain by successfully issuing its first green bonds. This follows Siemens, which also issued its bonds on the Polygon blockchain. On February 16, the Hong Kong government announced that it had raised $800 million through the issuance of tokenized green bonds.

Hong Kong issues $100 million in ‘green’ bonds on blockchain

According to a statement released on Thursday, it is reported that the government of the Hong Kong Special Administrative Region (HKSAR) announced that it has completed an inaugural green bond issuance for HK$800 million, or about US$103 million.

The dollar bonds were denominated in HKD with a yield of 4.05%. In addition, a syndicate of four banks (two of which are acting as custodians for the investors) helped distribute the bonds.

This issue is believed to be the first green bond issue by any government in the world. The funds from this issue will be used for Hong Kong’s environmental program.

Hong Kong proactively promotes the application of innovative technologies in the financial sector and actively explores new concepts and technologies to improve the efficiency, transparency and security of financial transactions.

Mr. Paul Chan, Secretary for Finance

Issuance on a Blockchain platform owned by Goldman Sachs

The Hong Kong government’s decision to issue Tokenised Green Bonds on Goldman Sachs, GS DAP, is a testament to its openness to experimenting with blockchain and its ability to anticipate the opportunities offered by the technology.

Tokenized Green Bonds are based on Goldman Sachs’ platform, which uses the Daml smart contract language deployed on Digital Assets’ Canton blockchain. This cutting-edge technology offers transparency, security and efficiency benefits that are particularly important for debt issuance.

The move demonstrates that Hong Kong’s legal and regulatory environment is flexible and conducive to innovation, whether in the crypto sector or in bond issuances. According to a statement, the government plans to publish a white paper to summarize the experience from this issuance and outline next steps.

The crypto community has welcomed the news, with some influential players expressing their satisfaction. This is notably the case for Coinbase, whose CEO, Brian Armstrong. Still frustrated by the U.S. SEC’s crackdown on crypto, he said in an angry tone that cryptocurrencies are available to everyone and that the U.S. is ceding sovereignty over these assets to countries like Hong Kong.

Although Hong Kong is part of the People’s Republic of China, the state has a status that gives it some autonomy. Unlike mainland China, the Hong Kong government takes a more open stance on cryptocurrencies and the underlying technologies. The issuance of tokenized green bonds thus demonstrates the growing importance of tokenization of financial assets and confirms that blockchain can contribute to increased efficiency and digitization of debt issuance.