Franklin Templeton introduced Hong Kong’s first tokenized money-market fund, a move that symbolizes a major change in the city’s digital finance landscape. The launch of the fund goes hand in hand with the fintech strategy “Fintech 2030” of the Hong Kong Monetary Authority (HKMA) that aims to implement AI and blockchain into the financial infrastructure of the region.
The OnChain Fund of Franklin Templeton, a US Government Money Fund Luxembourg-domiciled and secured by short-term U.S. Treasury securities, allows investors to be holders of tokenized shares which represent their ownership in a direct way on the blockchain. This method is designed to enhance transparency, liquidity, and settlement efficiency by making it very easy to go from the DeFi system to the traditional finance system and vice versa.
The fund is the largest venture launched under the HKMA’s Fintech 2030 program, disclosed by the Chief Executive Eddie Yue Wai-man on the very day of the fund’s inauguration. The all-in plan features more than 40 measures to revamp the competitive edge of Hong Kong’s finance sector through the use of AI, setting up a regulatory framework for tokenization, and enhancing cybersecurity.
As reported by the South China Morning Post, Yue mentioned that the HKMA is working on a tokenized deposit settlement framework, which might lead to the use of a central bank digital currency (CBDC) for interbank payments in the future. This step is in line with the city’s effort to be a leader in digital finance innovation and to promote the cross-border interoperability of tokenized transactions.
As part of Project Ensemble, which is a sandbox program experimenting with tokenized deposits and fund transfers, Franklin Templeton cooperates with HSBC and OSL Group, one of the 11 licensed virtual-asset service providers in Hong Kong. The executives of HSBC indicated that the arrangement might make it possible to have settlements that are almost instant between the traditional banking and blockchain systems, thus enhancing the speed and accuracy of transactions.
Worldwide asset managers are committed to their tokenization endeavors at a faster pace as they consider blockchain to be a primary source of operational efficiency and trust. The report by Ripple and Boston Consulting Group in April estimated that the total value of tokenized real-world assets might jump from about $36 billion to $19 trillion by 2033, thus signaling the extent of the change in the global asset management sector.
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