Hong Kong's Green Bond Revolution: $10B in Tokenised Carbon Credits on Public Blockchain

Hong Kong's Green Bond Revolution: $10B in Tokenised Carbon Credits on Public Blockchain - Blockchain.News

Hong Kong has established itself as a global leader in green finance and blockchain innovation, having issued multiple tokenized green bonds and piloted carbon credit tokenization through its regulatory sandboxes. While a confirmed $10 billion tokenized carbon credit deployment on a public blockchain has not yet been officially announced by Hong Kong's government, the city is actively testing frameworks and infrastructure that could support such an initiative at scale.

Confirmed Progress: Tokenized Green Bonds

Hong Kong became the first government globally to issue a tokenized green bond in February 2023, launching HK$800 million (approximately USD$102 million) of bonds on a permissioned blockchain platform using Goldman Sachs' GS DAP tokenization technology. The following year, the government issued a far larger multi-currency digital green bond totaling HK$6 billion (USD$765 million) denominated in HK dollars, Renminbi, US dollars, and euros—a world first. These bonds funded projects including renewable energy, energy conservation, pollution mitigation, wastewater management, and climate change adaptation.

The Hong Kong Monetary Authority (HKMA) has shortened settlement cycles from the traditional T+5 to T+1 and integrated Green Bond Framework documentation with digital asset platforms, improving transparency for investors. The success of these initiatives has positioned Hong Kong as a blueprint for other jurisdictions exploring tokenized sovereign debt.

Carbon Credit Tokenization: Active Exploration

Hong Kong is actively piloting tokenized carbon credit systems through its Project Ensemble sandbox, launched by the HKMA in 2024. Northern Trust joined the initiative in 2025 to test cross-border trading of tokenized voluntary carbon credits using The Northern Trust Carbon Ecosystem, a private blockchain platform. The goal is to enable overseas investors to seamlessly access and trade carbon credits listed in Hong Kong.

The HKMA's September 2025 announcement confirmed that tokenization of carbon credits is under exploration through Project Ensemble, with the test report expected to be completed by year-end. Financial Secretary Paul Chan emphasized that these innovations aim to enhance liquidity and depth within carbon markets.

Core Climate Platform and Regional Carbon Market

Hong Kong Exchanges and Clearing (HKEX) operates Core Climate, an international carbon trading platform settled in Hong Kong dollars and Renminbi. As of October 2025, the platform supports over 100 institutional participants and provides access to more than 50 globally verified carbon credit projects. A landmark December 2024 transaction saw Cathay Pacific Airways settle 50,000 tonnes of carbon allowances, demonstrating the platform's operational scale.

In 2025, HKEX signed a historic memorandum of understanding with three mainland exchanges—Guangzhou Emissions Exchange, Shenzhen Green Exchange, and Macao International Carbon Emission Exchange—to harmonize carbon market frameworks and develop standardized systems for voluntary carbon credit trading across the Greater Bay Area.

Scaling to $10 Billion: The Projected Path

While Hong Kong has not officially announced a $10 billion tokenized carbon credit deployment on a public blockchain as of October 2025, industry projections suggest such scale is achievable if current initiatives succeed. MSCI estimates the global carbon market could reach USD$35 billion by 2030, with Asia's fragmented markets representing significant untapped potential. Project Ensemble discussions and Core Climate's expansion indicate Hong Kong officials are targeting substantial growth in tokenized carbon credit volume.

The government's lifting of its borrowing ceiling for sustainable bonds to HK$500 billion (USD$64 billion) signals ambition to expand green finance infrastructure. Additionally, the Hong Kong Stock Exchange is exploring carbon-linked derivatives and other financial instruments to enhance market efficiency and attract institutional capital.

Public vs. Permissioned Blockchain Debate

Hong Kong's first two tokenized green bond issuances used permissioned blockchains (private networks) for regulatory control and privacy. However, Project Genesis research comparing permissioned and public blockchain prototypes is informing ongoing strategy discussions. A $10 billion public blockchain carbon credit system would represent a significant departure from current practice but aligns with global movement toward decentralized finance infrastructure. The HKMA continues balancing innovation, investor protection, and regulatory oversight as it evaluates these architectures.

Timeline and Next Steps

The HKMA's Project Ensemble test report on tokenized carbon credits is expected to be completed by late 2025. If findings support expansion, a scaled pilot involving multiple jurisdictions and institutional participants could launch in 2026. A $10 billion public blockchain carbon credit system, should it proceed, would likely represent a multi-year rollout beginning with regional testing across the Greater Bay Area and Southeast Asia.

Conclusion

Hong Kong has proven its leadership in tokenizing green bonds and is actively piloting carbon credit tokenization within regulatory sandboxes. While a confirmed $10 billion public blockchain carbon credit deployment has not been officially announced, the city's infrastructure, regulatory support, and international partnerships position it to achieve such scale if current projects succeed. The convergence of successful tokenized bond issuances, Core Climate's growing institutional participation, and HKMA's Project Ensemble initiatives suggests Hong Kong is laying the groundwork for a transformational shift in how carbon credits are issued, traded, and settled globally.

Sources: policyaddress.gov.hk, nomuraconnects.com, legco.gov.hk, esgnews.com, swashenterprises.com, captiveinternational.com, esgtoday.com, northerntrust.com, hkma.gov.hk, hkma.gov.hk, ainvest.com, ledgerinsights.com, phemex.com

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