𝐁𝐥𝐨𝐜𝐤𝐜𝐡𝐚𝐢𝐧 𝐚𝐧𝐝 𝐒𝐓𝐎𝐬 𝐜𝐨𝐦𝐢𝐧𝐠 𝐨𝐟 𝐚𝐠𝐞 The last decade has witnessed the global rise of blockchain, and in Hong Kong we are seeing a watershed moment. Hong Kong recently announced it is launching a second round of tokenised green bonds in the next few months. This follows a first round in February 2023 worth HK$800 million, which was the first sale of its kind by a government globally. For those who may be confused, tokenising a bond records beneficial interest using distributed ledger technology, or blockchain, rather than through traditional computerised book entries. The latest issue is another signal that Hong Kong aims to be at the forefront in attracting virtual asset business. Encouragingly, it is another real-world use-case for security token offerings (STOs), which offers momentum for developing blockchain-based solutions and the tokenisation of real-world assets. STOs are digital representations of ownership of assets such as real estate or various commodities, or economic rights such as a share of profits or revenue. STOs are issued on a blockchain via smart contracts, which can support regulatory disclosure, fairness and market integrity. Another benefit is the potential for liquidity by listing the tokens on virtual asset trading platforms. Two have been approved by the Securities and Futures Commission (SFC) in Hong Kong so far. CSpro, Somerley’s joint venture company with Coinstreet, recently obtained a Type 1 (dealing in securities) licence from the Securities and Futures Commission. In November 2023, CSpro launched the first primary issuance and distribution platform in Hong Kong specialised exclusively in STOs. We are convinced that a well-regulated environment is necessary for STOs to flourish. Security tokens have the potential to provide a valuable additional fund-raising channel for small and medium-sized enterprises and for investors a new way of participating in the market. Backed by real assets and income streams, STOs can offer low-to-medium investment risks while tapping into new technology. All innovations have their share of setbacks but an exciting 2024 surely beckons for blockchain and virtual assets more broadly. #Blockchain #blockchaintechnology #tokenization #tokenisation #greenbonds #hongkong #STO #SecurityTokenOffering #VirtualAssets #CSpro #Coinstreet #Somerley
