Last week, Raymond Chan, Director of the Hong Kong Monetary Authority (HKMA), announced plans to provide Hong Kong banks with guidance on Distributed Ledger Technology (DLT) in the coming weeks. He shared this during a speech at a DLT event for financial services. The HKMA jointly organized the event with the Securities Futures Commission (SFC) and the Insurance Authority (IA).
These institutions also aim to publish research, training materials and videos to support DLT adoption.
Chan described DLT as a “paradigm-shifting innovation,” highlighting its potential to enhance security and introduce automation and efficiency through its programmability.
He emphasized the regulator’s technology-neutral stance, adhering to a “same activity, same risk, same regulation” policy.
“As a growing number of banks are approaching us to ask how this principle applies in practice to DLT, we plan to issue a set of guidelines in the coming weeks to outline the key considerations that the HKMA will take into account when reviewing banks’ DLT applications,” said Mr. Chan.
HKMA has previously offered guidance on structured products and tokenized commodities, carefully avoiding overlap with the SFC’s jurisdiction over securities. It has also published guidelines regarding digital asset custody.
The additional guidance should be viewed in context: the HKMA recently unveiled Project Ensemble, a project focused on wholesale central bank digital currency (wholesale CBDC) aimed at promoting tokenization.
Mr. Chan compared the steps related to DLT to seeds. “Ladies and Gentlemen, the best time to plant a tree was 20 years ago. The second best time is now,” he said.
HKMA is actively involved in numerous DLT initiatives. It recently initiated the second phase of its retail CBDC pilot and introduced a stablecoin sandbox.
