This article is more than nine months old

Hong Kong’s Project Evergreen paves way for tokenised capital markets despite challenges

  • A report by the HKMA highlights results from its green bond issuance project.
  • The use of distributed ledger technology enhanced efficiency and transparency in traditional bond processes, the report found.
  • The HKMA’s chief executive warns that there are still multiple challenges to be overcome ahead of further adoption.

The Hong Kong Monetary Authority’s foray into tokenised green bonds — dubbed “Project Evergreen” — has shed light on both the promising potential and lurking challenges of using distributed ledger technology (DLT) in capital markets.

Launched in February, Project Evergreen offered HK$800 million ($102 million) of environmentally friendly green bonds to investors through the Goldman Sachs Digital Asset Platform. Project Evergreen is built on the Canton Network, a finance-focused blockchain whose backers include BNP Paribas, Cumberland, Deloitte, and Microsoft.

With the global issuance of tokenised bonds hitting $3.9 billion as of March, the HKMA is keen to ride the tide of tokenisation while navigating the complexities of integrating DLT with existing financial systems.

“Despite the increasing number of issuances globally in recent years, bond tokenisation is still at its infancy,” said HKMA Chief Executive Eddie Yue in a forward to a Project Evergreen report published on Thursday. “Multiple challenges would have to be overcome for it to be widely adopted.”

NOW READ: Hong Kong’s new crypto rules may be a boon for retail investors and a challenge for platforms, says Lennix Lai at OKX

Still, he added that the HKMA would continue to work with stakeholders to tackle remaining issues “with a view to further enhancing our ecosystem to support tokenisation’s broader adoption.”

The test and the takeaways

In 2021, HKMA began conceptual tests to tokenise green bonds, culminating in Project Evergreen. The project utilised DLT to handle various aspects of bond issuance, from initial offers to coupon payments, with an aim to test the financial infrastructure and the legal and regulatory environment throughout the bond lifecycle.

“Project Evergreen has successfully demonstrated the possibility of deploying DLT to a real capital markets transaction under the existing Hong Kong legal framework,” said Yue.

Join the community to get our latest stories and updates

A key upside was the elimination of manual errors through the removal of physical certificates in traditional bond processes. The use of DLT enables real-time data synchronisation, enhancing efficiency, transparency, and privacy across multiple organisations, the report found.

On-platform payments were made possible with Hong Kong dollar cash tokens minted by a unit under the HKMA.

Fragmentation and legal hurdles

The report also highlighted some issues with the project. “Existing legal and regulatory regimes may also need to be fine-tuned to keep up with — and facilitate — technology adoption. " Yue warned.

NOW READ: Bitcoin casinos and burger joints selling Tether — how Hong Kong fell back in love with crypto

He added that fragmentation could become an issue as more financial institutions come up with their own tokenisation solutions. “It will be crucial to consider how different solutions can connect and interact with each other as well as conventional systems,” he said.

The potential for adoption of DLT in the broader market remains to be seen, especially in retail-level tokenisation, which could widen investor bases and automate trading processes.

The HKMA and the Government of Hong Kong are in discussions to conduct further tokenised issuances. The focus is on addressing fragmentation, fine-tuning regulatory regimes, and paving the way for wider adoption in capital markets.

“DLT holds promise for revolutionising the operation of the financial markets,” the report stated. “Project Evergreen is an important step forward in promoting the adoption and realisation of the full potential of DLT in the bond markets.”

Callan Quinn, DL News’ Hong Kong-based Asia correspondent, covers the crypto industry in the region. Have a tip? Contact the author at

Related Topics