Hong Kong has set up a “supervisory incubator” to facilitate banks to properly adopt blockchain technology as the region continues its drive to become a crypto hub.
On Wednesday, the Hong Kong Monetary Authority, the de facto central bank, announced that the incubator is designed to help banks manage the risks associated with experimenting with blockchain or DLT implementation.
The incubator will focus on tokenized deposits as the initiative aims to address potential risks when banks move to productionize relevant services — such as deposits and loans — that would “cut across DLT-based and legacy banking infrastructures,” the HKMA said.
The HKMA plans to set up a supervisory platform for individual banks to review their risk control approaches before launching a blockchain-based product.
“As the banking industry continues to evolve, it is essential that we provide a supportive environment for innovation to thrive,” said Arthur Yuen, deputy chief executive of the HKMA. “The Supervisory Incubator for DLT is a key component of our strategy to foster the development of DLT-based banking solutions that are safe, efficient and beneficial to the industry and the wider community.”
Hong Kong has rolled out the welcome mat for crypto firms by enacting a crypto licensing regime for crypto trading platforms in 2023. The government’s proposed stablecoin bill is also progressing through the Legislative Council.
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