A wave of digital bond issuance in Hong Kong in recent days is showing rising appetite for the securities that use blockchain technology.
The Hong Kong Special Administrative Region government has appointed banks for a potential digital bond sale, said a person familiar with the matter on Thursday. If launched, it would mark their third such sale since 2023.
The mandate came just a few days after two Chinese companies – Shenzhen Futian Investment Holdings and Shandong Hi-Speed Holdings Group – priced similar notes in the city.
Digital bonds are debt instruments that utilize blockchain technology for their issuance, trading and settlement.
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The notes can be issued through distributed ledger technology platforms such as those provided by HSBC Holdings Plc or Goldman Sachs Group Inc, or on public blockchains like Ethereum which may offer greater flexibility.
The digital bonds in Hong Kong are still denominated in fiat currencies such as US dollars, Hong Kong dollars or Chinese yuan.
In addition to the SAR government, at least six digital bonds have been issued by corporates in Hong Kong so far, with about 70 percent of the $1 billion raised coming in 2025, according to data compiled by Bloomberg.
More companies from the Chinese mainland and elsewhere are considering it, according to John O’Neill, group head of digital assets & currencies at HSBC, as well as law firm King & Wood Mallesons.
The growth in adoption comes with digital assets gaining broader traction across Asia, as policymakers look to keep pace with US President Donald Trump’s pro-crypto policies.
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Hong Kong’s digital bond market is mostly driven by the city’s ambition to become a regional center for the sector, after a program launched late last year to promote market development. Such notes also may enjoy shorter settlement times and lower transaction fees compared with conventional bonds, and are able to tap into the growing appeal of blockchain-based securities.
Hong Kong is granting up to HK2.5 million ($320,500) to each eligible digital bond issuance in the city.
The pricings from Shenzhen Futian and Shandong Hi-Speed followed issuance earlier this year from Guotai Junan International Holdings Ltd and Bank of Communications Co, Ltd, Hong Kong Branch.
“We’ve seen a growing number of inquiries from companies who are interested in fundraising by way of issuing digital bonds for the past few months,” said Michael Lu, a Hong Kong-based securities lawyer at King & Wood Mallesons whose team has advised some of the digital issuances.
HSBC has tallied over $1.7 billion of issuances to date on HSBC Orion HK, a distributed ledger technology platform it established in February 2024. That total covers sovereign, financial institutions and corporate issuers from various domiciles.
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Still, even if the platform technology is innovative, according to King & Wood Mallesons the buyers still tend to be more on the traditional side.
“Currently, it’s traditional fixed-income investors who’re using fiat money that purchase these bonds,” Lu said. “One of the reasons is the absence of a common cryptocurrency to facilitate cash settlement across blockchains, such as stablecoins. Borrowers that have issued digital bonds have not tapped into the crypto investor base.”
