The introduction of the city's first Luxembourg-registered tokenised money market fund by Franklin Templeton, a US asset manager, signifies a significant advancement in digital trading in Hong Kong. This marks a major milestone in the implementation of the Fintech 2030 plan, which aims to position the city as a prominent fintech hub.
Franklin Templeton announced that the Franklin OnChain US Government Money Fund, which is registered in Luxembourg and invests in US government securities, will be open to institutional and professional investors in Hong Kong with at least HK$8 million (US$1 million) in assets.
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Tokenization permits investors to possess blockchain-backed digital versions of different assets such as savings, bonds, shares, digital currencies, and rewards points.
“This launch reflects our ongoing commitment to delivering innovative investment solutions that address the needs of modern investors by expanding the accessibility of tokenised products in this dynamic market,” says Tariq Ahmad, head of Asia-Pacific at Franklin Templeton.
“Looking ahead, we aim to offer a retail-approved tokenized fund, subject to the Securities and Futures Commission’s approval, as part of our broader efforts to democratise access to investment solutions and foster a vibrant digital assets ecosystem in the region.”
The first project under the Fintech 2030 strategy, as announced by Hong Kong Monetary Authority (HKMA) chief executive Eddie Yue Wai-man on Monday, is the initiative.
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The five-year strategic plan comprises more than 40 initiatives focusing on the implementation of advanced artificial intelligence and the introduction of tokenization products in order to enhance the city's fintech leadership.
Yue stated that the HKMA had a vision for banks to create a system utilizing tokenized deposits for clearing tokenized money market funds and central bank digital currency for interbank transactions.
The first tokenized UCITS money market fund registered in Luxembourg has been launched on a blockchain platform created by Franklin Templeton. This fund offers investors the chance to invest in top-notch short-term US government securities. UCITS is a set of rules that enables mutual funds to be sold across different European Union countries.
Since 2024, Franklin Templeton has been working with HSBC and OSL Group, which operates Hong Kong's first licensed virtual-asset trading platform, as part of the HKMA's Project Ensemble.
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HSBC, the largest bank in the city, has been investigating how to use tokenized deposits to facilitate fund transfers for OSL clients as part of the collaboration. Franklin Templeton has been working on developing blockchain technology and offering investment solutions for digital asset trading since 2018.