Linklaters Guides GF Securities (Hong Kong) in Successful Tokenised Securities Launch

Linklaters has advised GF Securities (Hong Kong) on the successful launch of its tokenised securities in Hong Kong SAR, making it the first major Chinese brokerage firm to mint, issue and distribute self-created financial assets on the public blockchain.

Significantly, this pioneering transaction uses Hong Kong law to constitute and issue digital notes as native tokens on the public Ethereum blockchain and also marks the issuance of tokenised securities by a Hong Kong incorporated company. Following closely on the publication of the Circular on intermediaries engaging in tokenised securities-related activities by the Securities and Futures Commission at the end of 2023, this successful issuance underscores the developing role of Hong Kong as a digital hub in Asia and globally.

The Linklaters team was led by Linklaters’ partner Chin-Chong Liew and capital markets partner Ying Zhou from Zhao Sheng Law Firm, Linklaters’ joint operation partner in China, supported by financial regulation partner Kishore Bhindi and capital markets managing associate Shirley Chan.

Linklaters’ Asia Head of Structured Finance and Derivatives Chin-Chong Liew commented: “This is a testament that Hong Kong law is sufficiently flexible and resilient to accommodate the tokenisation of financial assets to serve the needs of market participants without a specific need for widespread law reform. We look forward to supporting clients and other stakeholders in the digitalisation of financial products and markets, as well as to pushing forward the tokenisation of other asset classes in Hong Kong and the region.”

The Linklaters Asia team recently launched a thought leadership report on the legal considerations for “the issuance and transfer of digital bonds under Hong Kong law”, aiming to support clients looking to tokenise bonds and any other financial products under Hong Kong law. Linklaters have also advised on many of the “first to market” novel transactions in Asia and globally, including:

• the first fixed-income tokenised fund by a Chinese financial institution in Hong Kong;

• the first tokenised structured notes on a public blockchain in Hong Kong SAR

• the inaugural tokenised green bond by the Hong Kong SAR Government;

• advising Euroclear Bank on the establishment and the launch of its new Digital Securities Platform and the inaugural digital securities issuance by the World Bank; and

• advising the European Investment Bank on the issuance of its first-ever notes in digital form on the Ethereum public blockchain.