September 9, 2024
By Our Correspondent
The Hong Kong Monetary Authority (HKMA) has officially introduced the Project Ensemble Sandbox, an innovative initiative designed to promote the tokenization of assets within Hong Kong. This project represents a crucial component of Project Ensemble, which focuses on the wholesale central bank digital currency (wCBDC) initiative by the HKMA, aimed at fostering the growth of the tokenization market. Initiated in March 2024, Project Ensemble investigates various tokenization applications across multiple sectors, including green finance, trade, and supply chain finance.
Among the initial private sector participants in the Sandbox is Ant Digital Technologies, a subsidiary of Ant Group, which has been instrumental in developing the Tokenized Asset Platform. This platform enables smooth Delivery-versus-Payment (DvP) transactions for both traditional assets and tokenized deposits, thereby facilitating efficient transactions across different banks as well as within the same bank.
Key Tokenization Applications:
Green and Sustainable Finance
Ant Digital Technologies is utilizing blockchain and Internet of Things (IoT) technologies to improve transparency and asset valuation in the realm of green finance. A significant milestone includes the digitization of over 9,000 electric vehicle charging stations owned by Longshine Technology Group, which is listed in Shenzhen. These charging stations have been transformed into Real-World Assets (RWAs), enabling the company to obtain its first cross-border financing in Hong Kong. This initiative is anticipated to boost growth in the renewable energy sector.
Trade and Supply Chain Finance
Ant Digital Technologies is also making significant advancements in the field of trade finance. By leveraging the Tokenized Asset Platform and tokenized deposits, Ant Digital successfully facilitated the transfer of an electronic Bill of Lading (eBL) on the Global Shipping Business Network (GSBN). Key financial institutions, including HSBC, Hang Seng Bank, and Bank of China (Hong Kong), played vital roles in settling this transaction using tokenized deposits, representing a notable advancement in the modernization of global trade finance.
The Sandbox has garnered significant interest from prominent entities such as HSBC, Standard Chartered (Hong Kong), Bank of China (Hong Kong), and Hang Seng Bank, all of which are contributing tokenized deposits to the initiative. Additionally, Microsoft Hong Kong, Ant Digital Technologies, and HashKey Group are collaborating directly on the experimental wCBDC platform, designed to enhance interbank settlements through the use of tokenized assets. The Securities and Futures Commission (SFC) has also become a participant in this initiative, concentrating on the application of tokenization in fixed income and funds. Major financial institutions, including BlackRock and Franklin Templeton, are engaged in testing these applications, underscoring Hong Kong’s dedication to leading advancements in digital finance.
Zhao Wenbiao, CEO of Ant Digital Technologies, conveyed his enthusiasm regarding the company’s participation: “We are honored to be among the first participants in Project Ensemble. This initiative allows us to explore innovative projects in tokenization and digital finance. We are particularly proud of our work in supporting green and sustainable finance, as well as our contributions to trade and supply chain finance.”
Next Steps and Broader Impact
The Sandbox is expected to foster further experimentation in liquidity management and cross-border payments. In collaboration with Standard Chartered and HSBC, Ant International (a separate entity from Ant Digital) is working on developing a global liquidity management solution using its Whale platform, aimed at enabling 24/7 real-time cross-border payments.
The HKMA plans to expand the scope of the Sandbox by adding new use cases and collaborating with global partners like the Bank for International Settlements (BIS) Innovation Hub.
The authority is also exploring interoperability between the Project Ensemble platform and the Banque de France’s blockchain system for wCBDC. With its focus on tokenization, digital finance, and green investment, Project Ensemble positions Hong Kong as a leader in the global shift towards decentralized finance, ensuring the city remains a key player in the evolving digital economy.
