The Sandbox is designed to enable interbank settlement using experimental tokenised money, focusing on transactions involving tokenised assets.

The initial round will involve both traditional financial assets and real-world assets, covering four main themes: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance. The HKMA will continue to engage with the industry to gauge interest in tokenisation, develop new themes and identify further use cases for tokenisation.

See also the Opening remarks by HKMA Chief Executive Eddie Yue given at the launch ceremony for Project Ensemble Sandbox.

All VATPs operating in Hong Kong must be either licensed by the SFC, or “deemed-to-be-licensed” VATP applicants under the AMLO. It is a criminal offence to operate a VATP in Hong Kong in breach of the AMLO.

The circular on expected standards applies to "custodial activities of digital assets (i.e. assets that depend primarily on cryptography and distributed ledger or similar technology), except limited purpose digital token, held on behalf of clients by authorized institutions  and subsidiaries of locally incorporated authorized institutions."

The circular on tokenised products sets out the supervisory standards expected of authorized institutions in the sale and distribution of tokenised products to their customers. It covers "tokenised products which refer to digital representation of real-world assets using distributed ledger or
similar technology, but does not apply to those regulated under the Securities and Futures Ordinance and governed by the relevant requirements issued by the Securities and Futures Commission  and the Hong Kong Monetary Authority from time to time."

See also our articles:

HKMA guidance on digital assets custody: a major step towards enhancing digital trust

Tokenisation of financial products – HKMA supervisory standards