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Hong Kong Announces New Wholesale CBDC Project to Support Tokenization

The Hong Kong Monetary Authority (HKMA) has unveiled Project Ensemble - a wCBDC project focusing on tokenization

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Hong Kong has announced a new wholesale central bank digital currency (wCBDC) project with a focus on tokenization.

Yesterday, the Hong Kong Monetary Authority (HKMA) revealed Project Ensemble, which seeks to " explore innovative financial market infrastructure (FMI) that will facilitate seamless interbank settlement of tokenized money through wCBDC."

"The project will initially focus on tokenized deposits, which is a digital representation of commercial bank deposits, issued by commercial banks and made available to the general public," HKMA explained.

wCBDCs provide infrastructure for RWAs as digital tokens on blockchain networks. Leveraging wCBDCs for tokenization enables enhanced liquidity, transparency, and accessibility of assets. This allows for fractional ownership, faster settlement, and increased market efficiency.

Project Ensemble is a key part of HKMA’s initiatives to facilitate the development of tokenization market.

Hong Kong has been toying with CBDCs since 2017. Last year, HKMA launched a pilot of the e-HKD with 16 banks and payment companies including Alibaba Group’s Alipay Financial, Mastercard AsiaRipple LabsVisa and HSBC.

Hong Kong Pilots e-HKD With Ripple Labs, Visa, HSBC, More
The e-HKD pilot marks the second stage of Hong Kong’s three-stage approach to developing a CBDC

The program was a key component of Rail 2 under the HKMA's three-rail approach towards the potential implementation of a retail CBDC (central bank digital currency).

"Project Ensemble will provide fresh impetus to our vibrant financial industry and reinforce our forefront position in tokenized money and assets," said Eddie Yue, Chief Executive of the HKMA.

Last month,  Hong Kong's finance regulator issued a comprehensive circular on February 20, 2024, outlining new guidelines for authorized institutions (AIs) engaging in the custody of digital assets.

HKMA's decision to introduce new guidelines stems from the recognition of the growing interest among AIs in providing custodial services for digital assets. As these services expand, the need to safeguard client assets against theft, fraud, and mismanagement becomes increasingly critical.

Hong Kong Sets New Standards for Digital Asset Custody
The guidelines align Hong Kong’s regulatory framework with international best practices, positioning the region as a leading global center for digital asset innovation and investment.

CoinDesk also announced that its flagship conference, Consensus, will be expanding to Hong Kong, with the first edition to be held in February 2025.

"Hong Kong has strategically positioned itself as a pivotal digital assets hub in this dynamic region. Consensus has consistently served as a global event, bringing together all facets of the cryptocurrency, blockchain, and Web3 community," Foster Wright, CoinDesk president, said.