Once associated solely with cryptocurrencies, digital assets now represent a growing synergy between new blockchain technologies and traditional institutions such as corporates and banks, driving innovation in investment products. Hong Kong has positioned itself as a digital asset hub, leveraging its technological advances to attract mainland Chinese companies and financial institutions seeking to launch digital assets.

This week, Bank of Communications ( Hong Kong ) issued a US$300 million unsecured floating-rate digital bond with a three-year tenor, marking the first issuance of a digitally native bond by a Chinese bank. Moody’s assigned a preliminary A2 rating to the bond. The issuance utilizes HSBC’s Orion digital asset platform and is cleared via the Central Moneymarkets Unit ( CMU ), Hong Kong’s central securities depository, which is integrated with Orion.

Earlier milestones in Hong Kong’s digital asset journey include HSBC’s issuance of the first digitally native bond by a private-sector entity in September 2024, which followed the Hong Kong government’s digital green bond issuances in 2023 and 2024.

In another notable development, OSL, one of Hong Kong’s first licensed virtual asset platforms, and China Asset Management ( Hong Kong ) are set to launch a tokenized money market fund under the Hong Kong Monetary Authority’s Project Ensemble. Pending regulatory approval, this fund will be the first tokenized fund available to retail investors in Hong Kong.

The initiative represents a significant step towards broader adoption of tokenized financial products and greater accessibility to digital assets. In an interview with Eugene Cheung, chief institutional business officer at OSL, reveals that the fund is likely to officially launch in 2025.

Beyond financial institutions, Chinese corporates are also exploring Hong Kong’s digital bond market to attract international investors and develop the offshore renminbi market.

For example, Zhuhai Huafa Group, a state-owned enterprise in Guangdong Province, issued its inaugural three-year, 1.4 billion yuan ( US$192.2 million ) digital bond in Hong Kong through HSBC Orion digital asset platform in December 2024, with an interest rate of 4.5%. The bond is listed on the Hong Kong Stock Exchange ( HKEX ) and Macau MOX, providing access to international investors through HKEX’s southbound trading and Euroclear/Clearstream.

Says Cheung: “Looking ahead, the adoption of blockchain technology by institutions is expected to accelerate. We anticipate more banks, funds, and securities firms embracing it as traditional finance increasingly integrates with blockchain-based finance. It’s no longer just about speculating on cryptocurrencies; we’ll see more applications tied to real-world use cases. Both the Hong Kong and US governments are likely to place blockchain at the core of their agendas.”