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Bank of China unit issues digital securities on Ethereum blockchain in Hong Kong amid city’s virtual asset push

  • The product from Bank of China’s global investment arm is the first tokenised security from a bank in the mainland, where cryptocurrencies are banned
  • Hong Kong’s efforts to become a virtual asset hub have generated speculation that the city could serve as China’s gateway to the crypto market

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Bank of China’s investment arm in Hong Kong has issued its first tokenised security assets on the Ethereum blockchain, taking advantage of the city’s crypto-positive positioning. Photo: Shutterstock
Coco Fengin Beijing

Bank of China, through its global investment arm, has become the first mainland financial institution to issue a tokenised security in Hong Kong amid the city’s effort to become a virtual asset trading hub.

Hong Kong-based Bank of China International Holdings (BOCI) has issued 200 million yuan (US$28 million) worth of fully digital structured notes in the form of tokens on the Ethereum blockchain, according to a statement on Monday from the investment bank UBS, which created the product and placed it with its Asia-Pacific clients.

A tokenised security is one that is recorded on a distributed ledger rather than in traditional computerised book entries. The new product, constituted under Hong Kong and Swiss law, follows the first tokenised security that UBS issued in December as a US$50 million fixed-rate note, the bank said.

“We are driving the simplification of digital asset markets and products,” said BOCI deputy chief Ying Wang in a statement. “We are encouraged by the evolution of Hong Kong’s digital economy and are committed to promoting the digital transformation and innovative development of Hong Kong’s financial industry.”

Ethereum, one of the largest distributed ledgers in the world, is best known for ether, the second-largest cryptocurrency by market capitalisation after bitcoin. Its main innovation was the creation of programmable smart contracts that allow for a variety of product types, but as a public blockchain that manages fees using its native cryptocurrency, it cannot be used legally in mainland China.
Hong Kong’s moves since last October to court virtual asset business has led to some speculation that the city could be the mainland’s gateway to the crypto market. Experts say the BOCI move is a positive sign for Hong Kong’s crypto ambitions.
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