Blockchain Oracle provider Chainlink announced it’s enabling the secure exchange of a Hong Kong CBDC and an Australian dollar stablecoin as part of Phase 2 of the e-HKD+ Pilot Program. For some time, the pilot program has been focused on exploring how tokenization can grow the next generation of payment infrastructure. That means comprehending tokenization’s role in transactions while prioritizing maintaining financial stability and adhering to compliance standards. So far, the issuance and reserve management of the Hong Kong CBDC has been under the purview of the Hong Kong Monetary Authority. At the same time, ANZ has played a similar role for tokenized deposits. Analysts are concerned about the e-HKD+ pilot program implications Compared to fiat currency exchange, the e-HKD+ pilot program allows state-issued CBDCs to interact securely and efficiently, with fewer time delays, transaction costs, and dependence on multiple intermediaries. Thus, pilot participants were eager to see the project succeed. They have long considered various interoperability strategies that would streamline cross-chain transactions and had to choose between three. The first approach involved Hash Time-Locked Contracts, allowing conditional transactions across multiple blockchains. Here, the sender could set up a hash lock and start a transaction that secures the assets under both the hash and a time constraint. The second approach involved the digital asset issuer managing the minting and burning of tokens across different chains to enable cross-network transfers. While this model is relatively simple and relies on trust in the issuer, it had notable drawbacks: it required ongoing manual involvement, missed out on blockchain’s programmable potential, and fell short in terms of transparency and verifiability when compared to decentralized, on-chain solutions. The third option was Chainlink CCIP , which allows cross-chain transactions and data passage across different networks. As per Chainlink’s X post, they will now be working to facilitate transactions. Using Chainlink’s CCIP, the pilot initiative hopes to support seamless cross-border payments by lowering costs and improving efficiency via smart contract automation, real-time data checks, and cross-network interoperability. Additionally, Visa and Fidelity are supporting the pilot program. However, some analysts are worried about the impact of the KD pilot program. Moreover, regulators and financial institutions are still keeping an eye on programmable digital assets and how they can be utilized in monetary systems. Still, the involvement of Visa and Fidelity in the project signals institutional interest in exploring new financial infrastructure—as long as it adheres to security, regulatory, and scalability standards. Analysts also believe such pilots will provide a foundation for more CBDCs and stablecoins. The Hong Kong Legislative Council passed a stablecoin bill in May In May, Hong Kong’s Legislative Council approved a stablecoin bill to regulate fiat-backed stablecoin issuers. The law has been gazetted but is still pending enforcement, with no confirmed commencement date. HKMA has, however, maintained that the law will come into effect this year. The authority is still seeking feedback on its proposed anti-money laundering (AML) and counter-terrorist financing (CFT) requirements for stablecoin issuers. Recently, China’s largest securities company, CITIC Securities, released a note analyzing the stablecoin laws in May, claiming stablecoins allow for real-world asset tokenization and expand tokenization activities from mainland China. The company’s examination was mainly driven by Ant Digital tokenization activities, like its partnership with Shenzhen-listed Longshine Technology Group. Ant Digital also worked with the Global Shipping Business Network (GSBN) to tokenize electronic bills of lading (eBL). Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
