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Bank of China Subsidiary Issues First Tokenized Security in Hong Kong
BOCI issued CNH 200 million in structured notes on Monday.
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Bank of China arm BOC International Holdings Limited (BOCI) successfully issued $27.9 million worth of digital structured notes in Hong Kong on June 12, UBS announced on Monday. While BOCI becomes the first Chinese bank to issue a tokenized security in the city, it also marks the first-of-its-kind asset launched in the Asia Pacific under Switzerland and Hong Kong laws.
BOCI Issues Digital Structured Notes in Collaboration With UBS
BOCI, a wholly-owned subsidiary of the state-owned Bank of China, issued CNH 200 million ($27.9m) in digital structured notes on Monday, becoming the first China-based financial institution to launch a tokenized security in Hong Kong. The move was enabled through BOCI’s collaboration with the Swiss lender UBS, which created the notes and introduced them to its clients in the Asia-Pacific region.
The move marks another step forward by BOCI and UBS regarding applicable law and blockchain types, with this issuance marking the first-of-its-kind security in the Asia Pacific constituted under Hong Kong and Switzerland’s law. The notes were tokenized on the main Ethereum blockchain.
”Working together with UBS, we are driving the simplification of digital asset markets and products, for customers in Asia Pacific through the development of blockchain-based digital structured products, designed specifically for customers in Asia Pacific.”
– said Ying Wang, Deputy CEO of BOCI.
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UBS Doubles Down on Tokenization Services
The announcement comes just several months after UBS issued a $50 million tokenized fixed rate note under English and Swiss law, digitized on a private blockchain. UBS, which recently acquired embattled rival Credit Suisse in the wake of banking turmoil, continues to double down on its tokenization services through its UBS Tokenize initiative.
Tokenized structured notes are blockchain-based financial instruments that represent ownership or rights to underlying assets, and they are issued and managed using blockchain technology. These notes combine the features of traditionally structured notes with the advantages of distributed ledger technology (DLT), such as increased transparency, efficiency, and potential liquidity.
Earlier this year, Hong Kong announced it had sold $102 million of digital green bonds – tokenized securities designed specifically for environmentally friendly or sustainable projects. The sale represented the first tokenized green bond launched by a global government. It represented one of Hong Kong’s many recent moves to restore its fintech and digital asset hub status.
Do you think tokenized securities powered by DLT technology are superior to traditional notes? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
