Standard Chartered Bank announces the second phase of the Hong Kong Monetary Authority's "Cyberport Dollar" pilot program.

Standard Chartered Hong Kong completed the second phase of the Hong Kong Monetary Authority's "HKD on Chain" pilot program with BlackRock and Mastercard recently. With participation from Libeara, the team explored the application of simulating "HKD on Chain" in end-to-end tokenization for fund subscriptions and redemptions, as well as studying the feasibility of using new digital currencies in the value chain to enhance efficiency and the challenges that may be encountered. The research team found that applying simulated "HKD on Chain" and tokenized deposits to fund cycles can bring the following benefits to different stakeholders in the value chain: For fund distributors, digital currencies such as "HKD on Chain" and tokenized deposits can provide greater flexibility and faster settlement, achieving T+0 subscriptions and redemptions through real-time delivery. For fund issuers, digital currencies can improve customer experience, extend trading hours, shorten settlement times, provide more transparent transaction status, allow for holding fractional fund units, and offer a flexible distribution framework. For payment network providers, blockchain technology-based payment network providers, such as Mastercard's Multi-Token Network (MTN), can achieve close to real-time settlement when using "HKD on Chain" and tokenized deposits, expanding ecosystem development. For fund tokenization service providers, tokenization allows customers to hold fractional fund units and expand opportunities for investors to access such investments through traditional and digital channels. However, the research also pointed out that before same-day settlement of tokenized funds becomes mainstream, various practical issues need to be addressed: ongoing valuation, transitioning from end-of-day pricing to real-time net asset value (NAV) calculation to achieve same-day settlement poses certain challenges; operational transformation, to support same-day settlement, there is a need to redesign the entire fund cycle's operating model, monitor liquidity risks, forecast cash flows, and strengthen governance and risk management frameworks; interoperability and network integration, establishing unified standards to connect stakeholders in the value chain and local and cross-border payment networks while meeting various requirements; regulatory standards, maintaining consistent standards in safeguarding data privacy and settlement to enhance institutional and investor confidence.