Digital Notes Structured on Ethereum Blockchain issued by BOCI

On June 12th, BOCI announced the issuance of 200 million Chinese yuan worth of digitally structured notes minted on the Ethereum blockchain, marking a significant advancement in their financial offerings. With this step, the Bank of China’s investment subsidiary would become the pioneer financial institute in the issuance of tokenized security in Hong Kong.

JUST IN: 🇨🇳 Chinese Bank BOCI issues country’s first tokenized security on #Ethereum blockchain.
— Watcher.Guru (@WatcherGuru) June 12, 2023

H.K. Issues Tokenized Security Built on Ethereum Blockchain

BOCI has successfully issued a fully digital structured note worth $28 Million; UBS initiated the product for its clientele in the Asia-Pacific region. This collaboration between them is welcomed in the realm of digitally structured notes. UBS previously issued $50 million tokenized fixed rate notes valid under English and Swiss law in December 2022. The notes were digitized on a permissionless blockchain.

Deputy CEO of BOCI, Ying Wang, commented on this, saying:

“Working together with UBS, we are driving the simplification of the digital asset market and products for customers in Asia-Pacific through the development of blockchain-based digital structured products designed specifically for customers in Asia Pacific.”

Along with this development, UBS is also expanding the concept of tokenization for structured products, repo financing, and fixed-income sectors. This product is the first of its kind in the region, and their collaboration is believed to have taken new steps toward blockchain development and adoption.

Hong Kong – Crypto Regulations & CBDC

Hong Kong is slowly emerging as a crypto-friendly city for the industry. Although the city is still experimenting with bringing a comprehensive regulatory framework for the industry, it has a long way to go. Interestingly, over 80 companies have shown interest in setting up shops in the Fragrant Harbor.

Digital asset companies wanting to operate there must register and complete the Know Your Customers (KYC) obligations. To safeguard investors from scammers, hackers, and bad actors, the authorities are stringent regarding this obligation.

The authorities of the Fragrant Harbor are looking for more practical and retail use cases for Central Bank Digital Currency (CBDC). One prominent use case is the release of equity of real estate assets with CBDC products. Last month, Ripple displayed a real estate tokenization solution at the Hong Kong Monetary Authority’s (HKMA’s) digital Hong Kong dollar (e-HKD).

The retail version of e-HKD CBDC would help release equity in the form of tokenized assets. A reverse mortgage is synonymous with equity release. It is a home loan method in which one does not have to pay for the duration of residence. The loan and interest shall be paid if the owner leaves or dies permanently.

Ripple previously mentioned in certain statements that the concept of tokenization could be very beneficial for banks. It could help curb the shortcomings in the equity release process with added speed.

The recent regulatory crackdown by the United States Securities and Exchange Commission is creating a hostile environment for the crypto industry. Many entities have indicated that moving offshore to places like Hong Kong could be viable. Furthermore, experts suggest that the enforcement action could make the United States lose its status as a financial superpower when crypto comes into power.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing