Fostering Banks’ Responsible Adoption of Distributed Ledger Technology through a Supervisory Incubator

The Hong Kong Monetary Authority (HKMA) has launched the Supervisory Incubator for Distributed Ledger Technology (the Incubator) to facilitate banks’ adoption of distributed ledger technology (DLT) and foster further innovation in the banking sector.

The Incubator provides a one-stop supervisory platform that aims to help banks responsibly productionise their DLT-based banking products and services, such as tokenised deposits. Through the platform, banks can engage a dedicated team from the HKMA for supervisory feedback as they progress along the productionisation journey. They may also opt to conduct live trials to validate the adequacy of their risk management controls and continuously refine their initiatives in a controlled setting.

In the longer run, the Incubator will also work to promote the overall banking industry’s awareness and capabilities in DLT risk management through initiatives such as supervisory guidance, sharing sessions, and forward-looking research projects.

By fostering a supportive environment for innovation, the Incubator ensures banks can adapt to the evolving fintech landscape while enabling adequate risk management control, driving progress in the digital economy.

For more details, please click here to view the relevant press release.

[Acknowledgement to the HKMA for providing material for the story.]