The Monetary Authority of Singapore (MAS) has unveiled a digital bond grant scheme, after Hong Kong announced a similar scheme in November. Both jurisdictions are keen to encourage the adoption of DLT and tokenization.
The substantial issuances by the government of Hong Kong put the jurisdiction on the map, whereas Singapore has been involved in some of the earliest bond tokenizations and has more established digital asset platforms such as ADDX and several others.
Which grant scheme offers the bigger benefit will depend on the specifics of the bond issuance.
Digital bond grant schemes compared
On the one hand, the maximum amounts are slightly higher for the Singapore scheme, which runs for five years rather than Hong Kong’s three-year duration. However, the Singapore grant covers 30% of eligible expenses, versus 50% for Hong Kong’s. The expenses covered in the Singapore scheme appear slightly more relaxed regarding the location they were incurred in. Both schemes cover up to two bond issuances.
Regarding the qualifying requirements, the schemes are similar. The Singapore grant is slightly more stringent in some areas but not others. For example, all bonds must be listed on SGX or a qualifying Singapore digital asset exchange, whereas Hong Kong only imposes similar requirements for the full grant. Singapore also specifies the range of currencies (SGD, USD, EUR, JPY), which Hong Kong does not restrict. Similarly, Singapore requires the issuer to be Asian and not a bank.
While Hong Kong does not specify the issuer jurisdiction, the full grant can only be claimed if the issuance platform is not associated with the issuer, which will mainly apply to banks. Plus, for the full grant, Hong Kong requires five or more investors that are not associated with the issuer.
The bond must be digitally native to qualify for the higher Singapore grant.
Likely digital bond impact
Given Singapore has been running extensive tokenization trials as part of Project Guardian, perhaps the Project might now have more live bond issuances. Fixed income is one of the main streams of work.
When Hong Kong announced its grant rules, it said it might adapt them from time to time. It remains to be seen if the two jurisdictions tweak their rules to respond to each other.
Of late HSBC has been heavily involved with Hong Kong digital bond issuances, given its HSBC Orion is integrated with Hong Kong CMU, the CSD. However, one of its earliest tokenized bond initiatives (in 2020) was in Singapore for an SGX listed bond. That issuance used the SGX digital issuance platform. Part of its attraction to Hong Kong might be its ability to use its own platform.
