Hang Seng Investment Management, the asset management arm of Hang Seng Bank, is launching a gold ETF on the Hong Kong Stock Exchange (HKSE) on 29 January. Subject to regulatory approvals, it plans to tokenize some fund units on the public Ethereum blockchain, with other permissionless blockchains potentially used in future. HSBC, the parent of Hang Seng Bank, is the tokenization agent.
While most securities issuances on public chains involve permissioned tokens that can only be held by allowlisted users, this one is more tightly controlled than many. This could reflect HSBC’s cautious approach to permissionless blockchain engagement. To date, most of the bank’s DLT activities have involved HSBC Orion, its permissioned distributed ledger, which is integrated with Hong Kong’s central securities depository (CSD), the CMU.
The structure of the gold ETF tokens restricts investor flexibility. Fund unit holders can only subscribe or redeem units through approved distributors, with no ability to sell or transfer tokens between parties. Instead, tokens can only be minted or burned through these controlled channels, and must remain at custodians appointed by the distributors. The system enforces these restrictions by allowlisting only the distributors themselves rather than individual end user wallets.
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