The Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority have completed the first phase of their review of wider distributed ledger technology use in Hong Kong's fixed income market. The review found that Hong Kong's legal and regulatory framework is already flexible enough to support tokenised bond issuance, based on the government's three tokenised bond deals and a growing number of corporate issuances, including by Asian and Middle Eastern issuers. To reduce legal uncertainty, the Companies Registry has also issued FAQs confirming that a register of debenture holders maintained using DLT can satisfy record-keeping requirements under the Companies Ordinance. The first phase also identified legal issues that need further clarification or enhancement to support broader market adoption. The authorities highlighted the need to address how DLT fits into existing fixed income market processes and to give market participants greater certainty over operational and legal treatment. In the second half of 2026, the review will move to a legislative phase focused on the flexibilities and law changes needed for more extensive DLT use in fixed income and digital assets more broadly. Areas under examination include allowing electronic execution of issuance documents for tokenised bonds, including recognition of electronic signatures for trusts linked to tokenised bonds and funds, and clarifying how concepts such as possession and transfer should apply to tokenised fixed income instruments.

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