Hong Kong Monetary Authority launches Supervisory Incubator for distributed ledger technology with initial focus on tokenised deposits

The Hong Kong Monetary Authority has launched the Supervisory Incubator for Distributed Ledger Technology, a new supervisory arrangement aimed at helping banks adopt distributed ledger technology (DLT) while effectively managing associated risks. The Incubator is intended to strengthen risk management capabilities at both the individual bank and industry levels, with tokenised deposits identified as a core focus at inception. At the bank level, the Incubator provides a one-stop platform for firms to seek supervisory feedback from a dedicated HKMA team and to reaffirm the adequacy of their risk management controls before fully launching a DLT-based initiative. Banks may also opt to run live trials under a hands-on, iterative approach to validate and refine specific aspects of their risk management implementation. At the industry level, the HKMA plans to promote best practices in DLT risk management through supervisory guidance, industry sharing sessions and forward-looking research, including for initiatives that may be productionised across DLT-based and legacy banking infrastructures such as deposits and loans.