Viewpoint.com Harvest Fund Token Business or Welcome New Development.
On January 29, Guandian New Media learned that Harvest Fund, Yuanbi Technology and financial services company Venture Smart Financial are discussing with the HKMA a stablecoin "sandbox" arrangement to convey regulatory expectations and provide compliance guidance to issuers who are interested in and have specific plans to issue fiat stablecoins in Hong Kong, and collect issuers' opinions on the proposed regulatory requirements.
It is worth noting that a person familiar with the matter said that there is currently no guarantee that the legislative framework will be finalized by the end of March, nor that all issuers seeking to participate in the trial will be approved.
"Launched a Hong Kong dollar stablecoin for cross-border payments between businesses. Venture Smart Financial revealed that it expects the sandbox arrangement to be launched soon.
Harvest Fund is a new adopter
The connection between Harvest Fund and the Sandbox starts in 2023.
In June 2023, 10 financial industry insiders in suits and leather shoes sat in a conference room at the Financial Services and the Treasury Bureau Building of the Hong Kong Government next to Victoria Harbour, and Zhao Xuejun, Chairman of Harvest Fund, and Hui Zhengyu, Secretary for the Financial and Treasury Bureau, Yue Edward, Chief Executive of the Hong Kong Monetary Authority, and Leung Fung-yee, Chief Executive of the Hong Kong Securities and Futures Commission, had a discussion on asset and wealth management, digital finance and green sustainable finance.
As one of the first 10 fund companies established in China, Harvest Fund has been very active in participating in the construction of Hong Kong as an international financial center, especially after the Hong Kong Monetary Authority issued the world's first batch of HK$800 million tokenized green bonds issued by the government in February 2023.
"Given the evolving nature of virtual assets and innovative models, we work together with the legal and regulatory regimes to provide a facilitating environment. "Hong Kong regulators have previously said they will embrace financial innovations related to the third generation of the internet, while welcoming market participants to launch tokenized offerings in Hong Kong.
Harvest Fund seized this opportunity and recently completed the issuance of the first tokenized fund in Hong Kong.
On December 28, 2023, Harvest International, a subsidiary of Harvest Fund, issued the first tokenized fund in Hong Kong. The tokenized fund completed its filing with the Hong Kong regulator in November 2023 and is the first fixed-income tokenized fund launched by a Chinese financial institution in Hong Kong with a tokenization arrangement.
"Harvest International is partnering with Meta Lab to launch a tokenized fund for professional investors. Industry insiders told Viewpoint New Media that due to regulatory restrictions, tokenized funds are generally not sold directly to retail investors at present.
According to other market sources, some funds are sold within a specific range based on private chains or permissioned alliance chains, and even tokenized funds on public chains are mostly open to specific groups of people or professional investors through whitelist addresses.
Judging from the regulations, Harvest International launched a fund based on the public chain and only for professional investors.
But what if the fund is issued in Hong Kong?
In early November 2023, the Hong Kong Securities and Futures Commission issued an announcement "Circular on Intermediaries Engaging in Tokenized Securities-related Activities", which attracted the attention of Guandian New Media, "Since tokenized securities are basically equivalent to traditional securities as tokenized as packaging, the SFC does not believe that there is a need to impose a mandatory requirement of 'professional investors only'. However, the industry attaches great importance to the fact that the prospectus regime under the Companies Winding-up Ordinance and the investment offer regime under Part 4 of the Securities and Futures Ordinance will also apply to tokenised securities offerings to the public in Hong Kong. "
This means that in the future, the offering of tokenized securities will not be limited to professional investors, and Hong Kong may further offer tokenized funds and other products to retail investors subject to meeting regulatory requirements. At this time, Harvest Fund chose to issue a tokenized fund in Hong Kong, perhaps to seize the opportunity to expand its customer base.
Behind the collaboration
It is worth noting that on January 26, Harvest Fund Hong Kong also submitted an application for a bitcoin spot exchange-traded fund to the Hong Kong Securities and Futures Commission, as the first institution in Hong Kong to submit a bitcoin spot ETF application, Harvest Fund will naturally not forget to find a partner when discussing stablecoin business with the Hong Kong Monetary Authority, and Yibi Financial, which holds a "Type 9 license", has become the most suitable choice.
At present, there are no more than 20 Type 9 institutions in Hong Kong, and Venture Smart Asia Limited, a subsidiary of Venture Sound Financial, is counted as one, and its upgraded Type 9 license originally only supported the provision of traditional asset management services and did not include virtual asset management, but if a licensed asset manager wishes to hold more than a certain percentage of virtual assets in its portfolio, it can choose to submit an additional report to the Hong Kong Securities and Futures Commission to obtain a license.
It is reported that traditional Type 9 licensed institutions can only manage portfolios with a proportion of less than 10% of virtual assets, and only after the upgrade of virtual assets can they manage portfolios with a proportion of 10%-100% of virtual assets, while Venture Capital is the first digital asset manager approved by the Securities and Futures Commission in Hong Kong to manage up to 100% of the portfolio of crypto assets.
Data sources: Opinion Index, Market Data
Previously, Venture Smart Financial also announced that the company has held Type 1 (securities trading), Type 4 (advising on securities) and Type 9 (asset management) licenses from the Securities Regulatory Commission, and is currently preparing to apply for a Type 7 license, so that it can provide virtual asset automated trading services in the future.
If it can win a new license, Venture Smart said it hopes to tokenize assets such as real estate.
In addition to the entry of Venture Financial and Harvest Fund, Guandian New Media also noticed the peer Yuanbi Technology, a company with a strong mainland background, which was officially established in 2020 by Norman Chan, former chief executive of the Hong Kong Monetary Authority and president of the Hong Kong Web3.0 Association, "The company aims to help trading enterprises solve the pain points of difficult and slow cross-border payments, and facilitate enterprises to manage foreign exchange risks."
In addition to the currencies commonly used for trade payments, Yuanbi Technology plans to launch a unit of account and payment synthesized from multiple currencies in the region, "Yuanbi", which can be used for daily cross-border payments by trading enterprises, that is, virtual currencies in a broad sense, which are "stablecoins" linked to fiat currencies, and are also blockchain-based payment systems backed by physical assets. Such a background undoubtedly created the basic conditions for Yuanbi Technology to participate in the stablecoin business in the future.
It is worth noting that the main investors of Yuanbi Technology include Bright Venture Investment L.P., Dragongfly Round L.P., Eminent Vision Limited, and HashKey Holdings Limited As well as ZhongAn Digital Assets, Guandian New Media learned through enterprise investigation that most of the directors of this company are people in the mainland financial industry, including Ou Yaping, former chairman of ZhongAn Online, Xu Wei, president of ZhongAn International, Xiao Feng, chairman of HashKey Group, and Feng Bo, managing partner of Dragonfly Capital.
At the launch ceremony of HashKey Exchange, Hong Kong's first licensed retail virtual asset exchange, in August 2023, ZA Bank's virtual banking arm, CEO Yiu Man-song, said that ZA Bank is preparing to partner with Hong Kong-licensed exchanges such as HashKey Group, and in November, ZA Bank, virtual asset exchange and Web3 technology company OKX jointly announced the opening of an operating account for OKX Hong Kong.
From this point of view, behind the establishment of Yuanbi Technology, it has led to the investment path of a group of virtual asset tycoons, and now it is choosing to cooperate with Harvest Fund and the Hong Kong government to discuss the stablecoin "sandbox" arrangement, which may bring substantial progress to Hong Kong's web3 finance.
"The liquidity crisis of global funds has caused Hong Kong stocks to fall for several consecutive years, and liquidity is urgently needed. Whether Hong Kong's web3 industry can be comprehensively improved, the timing node and key factors are crucial, and stablecoins are one of the key factors. Industry insiders said that the smooth implementation of stablecoins will help attract and precipitate some market funds into Hong Kong's capital market.
"As for the process, anchoring is not taken into account, inflation is not taken into account. This view may be radical, but this is how new markets and new rules should be born. ”