BOCI, Bank of China’s investment banking arm, has issued CNH 200 million ($28 million) worth of digital structured notes, according to a June 12 press release. This makes it the first Chinese financial institution to issue a tokenized security in Hong Kong.
The notes were originated by Swiss banking giant UBS, which had previously issued a $50 million tokenized fixed-rate note on a permissioned blockchain in December 2022. Through this latest issuance and the subsequent placement of the product with clients in the Asia Pacific region, both institutions have pushed the boundaries of applicable law and blockchain types.
The product is the first of its kind to bring securities regulated under both Swiss and Hong Kong law onto a public blockchain, and marks the beginning of a long-term collaboration between BOCI and UBS. Ms Ying Wang, Deputy CEO at BOCI, explained:
“BOCI is very pleased to be at the forefront of innovation in technology finance and digital finance. […] 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.”
As Observers previously reported, Hong Kong authorities brought in a new crypto-positive licensing regime at the start of June, and Chinese banks have been using this as a backdoor into crypto. Some have reportedly been approaching crypto start-ups in the region offering banking services, although there is a blanket ban on crypto activities on the mainland.
The BOCI transaction supports Hong Kong’s renewed ambitions to become a crypto hub, after authorities previously abandoned plans to implement limits on crypto trading.
Following the increasingly crypto-hostile approach of the Securities and Exchange Commission in the U.S., many companies will be looking for locations with a somewhat clearer outlook, and Hong Kong could capitalize on that.
Indeed, shortly after news of the SEC’s case against Coinbase broke, Hong Kong lawmaker Johnny Ng tweeted to invite the crypto exchange and other virtual asset operators to set up shop in the region.
Whether Coinbase takes him up on the offer remains to be Observed, but Hong Kong seems to have taken another step on its path to hub-dom.