Mastercard and Standard Chartered HK Tokenize Carbon Credits

Mastercard and Standard Chartered Bank Hong Kong (SCBHK) are breaking new ground. They’ve just wrapped up the first live trial of Mastercard’s Multi-Token Network (MTN), pulling off a proof-of-concept that tokenizes carbon credits right inside the Hong Kong Monetary Authority (HKMA) Fintech Supervisory Sandbox.

Carbon credit tokenization gets popular

It all started with a customer at SCBHK’s digital arm, Mox Bank. The customer chucked some cash into Mox aiming to grab a carbon credit. Mox hit up SCBHK to get this credit tokenized. They used Libeara, a fresh face in tokenization services hatched by SCBHK’s own venture wing, SC Ventures.

Standard Chartered Hong Kong announced that it has completed proof-of-concept testing of tokenized deposits and tokenized carbon credits through the Hong Kong Monetary Authority’s regulatory sandbox with virtual banks Mox, Mastercard and Libeara. pic.twitter.com/sbymKLd2yl

— metasgameOfficial (@metasgame9) May 14, 2024

With MTN in play, they managed to tokenize the deposit and pull off an atomic swap. That’s tech speak for swapping assets real-time across different blockchains. Neat, right?

Mastercard didn’t just cook up the MTN out of thin air. Launched in June 2023, it’s built on their own private blockchain.

Before this, they were busy running trials with the Reserve Bank of Australia using wrapped central bank digital currency (CBDC) and the HKMA with its e-HKD CBDC, though these CBDCs aren’t live yet.

Helena Chen, Mastercard’s boss for Hong Kong and Macau, put it straight. Mastercard’s all-in on pushing HK as a top spot for digital assets, backing HKMA’s push to juice up fintech and token biz in Hong Kong.

Hong Kong has been with crypto regulations

But it’s not just about fancy tech. The HKMA’s leaning hard on local banks, including SCBHK, to up their game serving crypto exchanges.

SCBHK’s also knee-deep in the HKMA’s Project Ensemble and the e-HKD pilot, not to mention their hand in the global Project mBridge. The e-HKD pilot kicked off its second stage this past March.

Beyond local shores, Standard Chartered’s been dabbling in CBDC projects with big names like SWIFT and U.K. Finance. Come last November, SC Ventures even launched a crypto fund over in the United Arab Emirates.

Now, about those rules. The Securities and Futures Commission (SFC) of Hong Kong laid down the law with a new set of rules for tokenized securities and other investment goodies in a circular dropped last November 2.

The demand for these tokenized products in Hong Kong, boosted by blockchain perks, spurred the SFC to sketch out some public guidelines on how to handle the securities and futures markets via tokenization.

This circular outlined a dozen key points but zeroed in on four biggies: the setup for tokenization, what you tell folks about it, who intermediates, and how competent the staff are.

They’re pretty bullish on letting the market rip with SFC-okayed tokenized products, provided they tick all regulatory boxes and add extra layers to cover any risks.

And for those out there using public blockchains without permission? The SFC’s got a word of advice: beef up your controls.

They expect providers to own their tokenized products fully, keep tight records, and show they’ve got their operational act together.