According to the press release, Project Sela "demonstrated the technical feasibility of a retail central bank digital currency architecture that can promote competition and innovation in digital payments by allowing non-bank payment intermediaries to connect directly to the CBDC ledger of the central bank. Leveraging distributed ledger technology (DLT), a proof-of-concept prototype was developed to showcase how the technical implementation of the proposed architecture can incorporate strict cybersecurity, legal and policy requirements."

Under a new licensing regime to take effect on 1 June 2023, all centralised virtual asset trading platforms carrying on business in Hong Kong or actively marketing to Hong Kong investors will need to be licensed by the SFC.

The SFC’s proposed regulatory requirements for virtual asset trading platforms are based on the regulatory requirements of the existing regime under the Securities and Futures Ordinance and are comparable to those for licensed securities brokers and automated trading venues. The SFC has also taken the opportunity to propose modifications to some requirements of the existing regime.

As part of the consultation, the SFC is seeking views particularly on whether to allow licensed platform operators to serve retail investors, and, if so, the measures to be implemented in addition to the proposed range of investor protection measures, which include ensuring suitability in onboarding clients and token admission.

The SFC said operators of virtual asset trading platforms which plan to apply for a licence, including pre-existing platforms, should "begin to review and revise their systems and controls to prepare for the new regime." Those which do not plan to apply for a licence should "start preparing for an orderly closure of their business in Hong Kong."

Deadline for comments is 31 March 2023.

A blockchain corridor network was developed to allow the 10 participating Hong Kong and Thai banks to conduct fund transfers and foreign exchange transactions on a peer-to-peer basis, which helps reduces transactions layers.

The authorities said that the project was successful and confirmed the technical feasibility of implementing practical solutions to address key pain points of cross-border payments, including inefficiencies, high cost, limited traceability and complex regulatory compliance.

Leveraging on smart contracts, the cross-border funds transfer process is enhanced to a real-time and atomic payment-versus-payment (PvP) manner.

The report said:

"The cross-border funds transfer process is enhanced to enable real-time transfers and atomic [payment-versus-payment] settlements. Leveraging smart contracts, funds transfers, and foreign exchange transactions are bundled together. The corridor network is designed to enhance banks’ foreign currency liquidity management, adopted the liquidity saving mechanism for multiple currencies and incorporated compliance to local regulations where possible."

The project, which was completed in December 2019, follows on the memorandum of understanding the HKMA and the BOT signed in May 2019.