Hong Kong is working to establish a tokenised financial system to attract more companies to set up treasury centres, providing investors with broader options and reducing transaction costs.

Tokenisation of money and assets could make financial services faster, more efficient, and accessible, benefiting both corporations and individuals, according to market players and government agencies.

As government-led tokenisation initiatives gain traction, more commercial applications are expected to emerge, improving corporate cash and treasury management by reducing time and cost of cross-border transactions.

The Hong Kong Chinese Enterprises Association recently formed a Corporate Treasury Centre Committee, comprising 43 member companies managing assets exceeding US$240 billion, with significant financing and annual settlements.

Tokenised financial products can enhance corporate cash and treasury management by facilitating 24/7 settlements, instant cross-border transfers, and more flexible investment redemptions, thanks to blockchain technology.

Ant International subscribed to and redeemed a private tokenised Hong Kong dollar money-market fund, setting a precedent for a 24/7 investment cycle that delivers nearly instant liquidity, marking a significant advancement in tokenised funds.

Tokenised funds are considered the “third revolution” in asset management, with assets under management projected to surpass US$600 billion by 2030, according to a white paper published by industry experts.

The potential demand for tokenised assets is significant, with ChinaAMC (HK) attracting over HK$5.3 billion (US$681 million) in its tokenised money-market funds this year, reflecting an 80 per cent increase since their launch.

Tokenisation democratizes access to assets for individual investors, enabling partial investments in high-value assets, increasing payment efficiency, and lowering transaction costs by eliminating financial intermediaries.

The Hong Kong Monetary Authority has initiated a pilot program, Project Ensemble, to facilitate real-value transactions using tokenised deposits and digital assets, aiming to enhance interbank settlement efficiency.

Project Ensemble pilot allows 20 participants to conduct transactions and utilize the regulator’s interoperability layer for more efficient interbank settlement, signaling the direction Hong Kong is taking towards tokenised financial systems.

Read more at Yahoo Finance: Hong Kong’s tokenisation drive set to boost treasury centres and investments