- The HKMA launched the Supervisory Incubator to help banks adopt DLT while managing risks and enhancing safety in implementation.
- Banks can refine DLT systems, test projects, and improve risk management with HKMA support before full deployment of tokenized services.
- The initiative strengthens industry readiness by sharing best practices and fostering safe DLT adoption across the financial sector.
The HKMA has unveiled a new DLT proposition to support the adoption of the technology by banks The Supervisory Incubator for DLT presented on January 8 is intended to encourage the use of DLT and address its’ risks.
The Incubator focuses on helping banks to safely introduce DLT into their work. This allows banks to identify and improve risk management measures before deploying DLT services such as tokenized deposits. Deposit tokens, which integrate DLT with conventional banking structures, are already gaining much attention in the market.
Source: HKMA
Dedicated HKMA Support
The Incubator will have a dedicated team from the HKMA for the banks that will be using the service. This team will give feedback on management and support for live testing of the DLT projects. The process enables the banks to experiment and fine tune their systems prior to the actual live implementation also cutting down on possible risks.
The program also contributes to the overall financial industry by disseminating the practices that have been deemed most effective. It consists of guidance materials, industry workshops and future oriented studies. These efforts are intended to enhance the sectors preparedness for the use of DLTs responsibly.
Arthur Yuen, Deputy Chief Executive of the HKMA stressed the significance of such move. He stated:
“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 Leads Fintech
The launch of the Incubator occurred at the same time as the fourth Forum on Innovative ICT-based Network Enterprises Technologies (FiNETech4). The event seen here brought together more than three hundred participants including insurance, banking, securities, and technology firms. Most of the conversations centered on how DLT can enhance the speed of transactions and the usage of information.
Hong Kong remain to be the most innovative when it comes to the financial markets. In December the SFC of Hong Kong accepted four more companies to provide virtual asset trading services making the total of seven companies. Wu Jiexhuang of the Legislative Council suggested that Bitcoin should be included in Hong Kong’s national reserve for financial stability in the same month.
The measures announced by the HKMA show that the city wants to remain at the pinnacle of fintech. Through promoting DLT adoption and digital asset development, Hong Kong is claiming itself as a financial technology hub. The Supervisory Incubator is a major element in realisation of this goal.
