Hong Kong's Third Digital Bond Push

Racing Singapore and Dubai for Tokenized Finance Dominance

Hong Kong is prepping its third blockchain-based government bond sale, dropping digitally native debt instruments denominated in U.S. dollars, euros, offshore yuan, and Hong Kong dollars. Pricing could finalize as early as today, according to Bloomberg sources.

The move signals a competitive positioning against Singapore and Dubai for leadership in tokenized capital markets.

Building Momentum

Hong Kong launched its first tokenized green bond in February 2023, followed by a HK$6 billion multi-currency digital bond in February 2024. Both issuances used blockchain infrastructure to automate settlement, reducing the typical five-day bond settlement window to one day.

The latest offering will be denominated across four currencies and built on HSBC's infrastructure. S&P assigned an AA+ rating to the notes, with risks mitigated by failsafe mechanisms allowing bonds to shift back to traditional systems during disruptions.

The "digitally native" designation matters. These aren't traditional bonds converted to blockchain format—they're created and settled entirely on distributed ledger platforms from issuance through maturity.

Corporate Participation Accelerates

At least six corporate entities have issued tokenized bonds in Hong Kong, raising a combined $1 billion. Roughly 70% of that volume came in 2025 alone, showing acceleration beyond government pilots into commercial issuance.

Recent issuers include state-backed firms Shenzhen Futian Investment Holdings and Shandong Hi-Speed Holdings Group, both pricing digital bonds just days before Hong Kong's latest government announcement.

Futian's 500 million RMB bond, registered on Ethereum, represents the first public blockchain issuance of its kind—a state-owned enterprise placing debt on a permissionless network rather than private banking infrastructure.

Why Blockchain for Bonds

Blockchain automates record-keeping aspects of issuance that traditionally rely on emails and spreadsheets, with ownership details recorded on distributed ledgers to dramatically reduce reconciliation costs.

Hong Kong's HK$6 billion 2024 issuance demonstrated the infrastructure advantages: what historically required five days to settle now completes in one day, reducing costs and settlement failure risk.

HSBC's Orion platform integration with Hong Kong's Central Moneymarkets Unit enabled global investors to access digital bonds via existing infrastructure links to Euroclear and Clearstream. That interoperability—blockchain settlement with traditional custody relationships—removes adoption friction for institutional buyers.

The Regional Competition

"Singapore and Dubai have made strong strategic moves in digital assets, posing real competition to Hong Kong," noted Li Han, analyst at Citic Securities.

The competitive dynamics are straightforward. Multiple Asian financial centers recognize tokenized securities as infrastructure—not experimentation. The question isn't whether capital markets adopt blockchain settlement, but which jurisdiction establishes standards and captures issuance volume.

Hong Kong accounts for roughly 30% of Asian international bond issuances, maintaining regional leadership for nine consecutive years. That incumbent advantage only holds if the city's infrastructure keeps pace with blockchain adoption elsewhere.

Singapore's regulatory frameworks for digital assets, Dubai's crypto-friendly policies under Trump administration influence, and various European initiatives all compete for the same institutional issuers considering tokenized debt.

Regulatory Support

Hong Kong launched the Digital Bond Grant Scheme in November 2024, covering 50% of eligible expenses for qualifying digital bond issuances up to HK$2.5 million. The three-year program explicitly aims to promote blockchain adoption in capital markets.

John O'Neill, HSBC's head of digital assets, confirmed rising institutional interest, while law firm King & Wood Mallesons noted tokenized bond offerings have become increasingly common client inquiries.

The grant structure demonstrates government recognition that blockchain infrastructure requires subsidization during adoption phase. Issuers face additional costs for blockchain platforms, smart contract audits, and new custody arrangements. The grant offsets these expenses to accelerate market development.

Infrastructure Choices

Bonds can be issued via distributed-ledger platforms like HSBC Orion or Goldman Sachs' GS DAP, or on public blockchains like Ethereum.

HSBC Orion's architecture adds another layer of interoperability. The platform integrates with the Canton Network—developed by Digital Asset (DAML)—which enables cross-ledger liquidity and privacy-configurable settlement. This integration matters for institutional adoption because Canton's architecture supports configurable privacy controls and cross-platform asset mobility—features essential for regulated bond issuance where confidentiality requirements vary by jurisdiction and investor type.

Futian's Ethereum issuance is particularly notable; a state-backed enterprise choosing permissionless infrastructure over private banking platforms. The decision signals confidence in public blockchain security and compliance frameworks.

Most institutional debt issuance still uses permissioned platforms where known counterparties participate. Public blockchain issuance requires additional compliance layers but offers greater transparency and interoperability. The Canton Network integration offers a middle path—permissioned participation with cross-platform asset mobility and privacy controls that public blockchains can't easily replicate.

The Broader Context

Tokenized bonds represent a small but growing segment of global fixed income markets. Traditional bond issuance still dwarfs blockchain-based alternatives by orders of magnitude. However, the trajectory matters more than current volume.

Hong Kong's 2024 digital green bond demonstrated blockchain bonds can achieve liquidity—the notes traded in secondary markets and were used as collateral for repo financing. That functional equivalence to traditional bonds removes a key adoption barrier.

Infrastructure improvements continue. Settlement times compress, custody arrangements standardize, and regulatory frameworks clarify. Each issuance tests assumptions about what's technically feasible and commercially viable.

Strategic Implications

Hong Kong's third digital bond issuance isn't itself transformative. The cumulative pattern—government pilots, corporate adoption, infrastructure investment, and regulatory support—signals strategic commitment to blockchain-based capital markets.

For Asia's financial centers, the competition plays out through infrastructure development rather than marketing. Which jurisdiction offers the most efficient settlement, clearest regulation, deepest liquidity, and broadest custody options determines where issuers place tokenized debt.

Hong Kong's advantages: established bond market leadership, robust legal frameworks, and connections to both Chinese and international capital. Its challenges: regulatory competition from Singapore and Dubai, questions about Hong Kong's political stability affecting long-term commitments, and the need to balance mainland China relationships with global market access.

The third digital bond sale represents another data point in that competition. Whether Hong Kong maintains its lead depends on execution velocity relative to competitors—not marketing claims about blockchain adoption.

For now, the metrics look favorable. Thirty percent of Asian international bond issuance, $1 billion in corporate tokenized debt, government subsidy programs, and major banks building blockchain platforms all point toward sustained momentum.