Central Bank Digital Currencies and Tokenized Securities

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On June 18, 2026, HKEX and HKMA rolled out a wholesale e-HKD pilot. The 24/7 central bank digital currency enables clearing participants to submit after-hours trading margin beyond regular banking hours, removing the 3 p.m. settlement deadline of Hong Kong’s legacy RTGS system.

The old deadline forced market participants to hold extra precautionary capital, causing obvious capital waste amid Hong Kong’s active derivatives market with 1.78 million average daily contracts in the first five months of 2026. HSBC and BOC Hong Kong serve as settlement banks, and clearing participants can join voluntarily. HKEX COO Vanessa Lau said the pilot fixes long-standing industry operational issues, while HKMA Deputy CEO Howard Lee stressed it is a real-market wholesale CBDC use case.

The pilot has global reference value. Technology never restricts round-the-clock trading; traditional banking settlement systems are the real bottleneck. Wholesale CBDC eliminates this barrier. Global peers including Japan’s SBI consortium and Intercontinental Exchange have met the same after-hours settlement dilemma and adopted blockchain settlement solutions, making Hong Kong’s pilot a replicable global model.

This brief covers three key industry trends: wholesale CBDC shifting to institutional settlement, rapid growth of 24/7 tokenized trading, and rising programmable compliance. It concludes that properly structured decentralization strengthens, rather than circumvents, financial regulation.

1. The CBDC Settlement Revolution

The global CBDC landscape has reached an inflection point. According to the BIS 2024 survey of 93 central banks, 94% are actively exploring CBDC in either retail or wholesale form. Yet beneath this near-universal engagement lies a decisive divergence: in advanced economies, 38% are piloting wholesale CBDC while only 15% are piloting retail, and no advanced economy has advanced retail CBDC beyond pilot phase. No new retail CBDCs launched in 2024. The three live retail implementations — the Bahamas Sand Dollar, Jamaica JAM-DEX, and Nigeria eNaira — each face significant adoption challenges. Wholesale CBDC operates within the existing two-tier banking architecture, positions commercial banks as participants rather than competitors, and targets regulated institutions, sidestepping the privacy controversies that have politicized retail CBDC in Western democracies. The tokenization of securities — bonds represent more than two-thirds of live tokenization initiatives — has created immediate demand for settlement in central bank money on DLT platforms.

Advanced central banks across Switzerland, Singapore, the Eurosystem and China are prioritizing wholesale CBDCs and slowing retail CBDC launches. Switzerland’s SNB operates the G10’s only live wholesale CBDC, settling CHF 750 million of tokenized bonds until 2027. Singapore’s MAS completed live interbank lending settlement in November 2025 with three major local banks. The Eurosystem runs three national DLT settlement tests, while cross-border Project Agorá delivers compliant atomic settlement across seven central banks and 40+ financial institutions.

The HKEX-HKMA pilot addresses a precisely defined operational constraint. The AHT session runs from 5:15 p.m. to 3:00 a.m. Hong Kong Time, enabling market participants to manage risk during European and U.S. hours. Yet clearing participants must submit advance margin deposit requests to HKCC by 3:00 p.m. for funds to count toward the subsequent AHT session. This deadline exists because Hong Kong’s RTGS system operates only during regular banking hours. The e-HKD pilot replaces the RTGS-dependent rail with tokens transferred on a DLT platform operating continuously, backed 1:1 by Hong Kong Dollar central bank reserves with instant settlement finality upon ledger confirmation. The pilot builds on Project Ensemble, the HKMA’s wholesale CBDC initiative launched in March 2024, with EnsembleTX enabling real-value transactions from November 2025. The October 2025 Phase 2 Report marked the decisive strategic pivot: the HKMA concluded that wholesale applications should be prioritized over retail use cases, given Hong Kong’s well-developed retail payment landscape.

2. Tokenized Markets: Securities, Currency, and 24/7 Trading

The tokenized securities market crossed a definitional threshold in 2025. Total tokenized real-world asset market capitalization expanded from $5.42 billion in January 2025 to $19.32 billion by March 2026 — a 256.7% increase. Tokenized equities emerged as the fastest-growing segment, scaling from $16 million to approximately $800 million in twelve months, representing roughly 4,900% growth. Within this market, concentration is extreme: Ondo Finance alone commands approximately 51.59% of on-chain equity value; the top three providers control over 90% of the market.

The entry of traditional market infrastructure players will dilute this concentration. DTCC received an SEC No-Action Letter in December 2025 for its tokenization service covering Russell 1000 constituents, with 50+ firms joining the Industry Working Group. Citi projects the broader tokenized asset market to reach $5.5 trillion by 2030 in a base-case scenario.

The infrastructure for 24/7 trading is now deploying at scale. Japan’s SBI consortium, backed by MUFG, SMBC, and Mizuho, will launch what members describe as “the world’s first regulated on-chain equity market” in 2026, enabling 24/7 trading of tokenized U.S. and Japanese stocks with minimum purchases as low as 1 yen. Robinhood launched 200+ tokenized U.S. stocks and ETFs for EU customers in June 2025, offering 24/5 trading on Arbitrum. ICE is developing a tokenized securities platform with 24/7 operations, announced January 2026. The critical caveat: when underlying markets are closed, market makers cannot hedge inventory risk, producing triple-digit basis-point spreads for meaningful-size trades outside U.S. hours. The FSB has warned that mismatched trading and settlement hours can create fragmentation, liquidity divergence, and confusion that “may exacerbate redemptions in times of stress”.

Stablecoins have achieved scale as the first widely adopted form of tokenized currency, with combined market capitalization exceeding $230 billion. Tether (USDT) commands approximately 65% (~$150 billion); Circle (USDC) holds roughly 22% (~$50 billion). The regulatory landscape underwent a structural shift in July 2025: the U.S. GENIUS Act mandates 1:1 reserves, same-day redemption, full AML/CFT compliance, and smart contract-level freeze/blacklist capabilities. The EU’s MiCA regulation — stablecoin provisions fully effective by late 2024 — has produced over 90 CASP authorizations by mid-2026. Hong Kong’s Stablecoin Ordinance (effective August 2025) mandates licensing and comprehensive AML/CFT compliance. A common thread across all frameworks is the mandate for smart contract-level compliance capabilities — institutionalizing the principle that tokenized currency must be sovereign-compatible.

Cross-border settlement is being transformed in parallel. Project mBridge scaled from $22.1 million in Q3 2022 to approximately $55.49 billion by November 2025 — a more than 2,500-fold increase — enabling atomic settlement across six participating jurisdictions in seconds rather than the three to five days typical of correspondent banking.

However, over 95% of mBridge settlement volume is denominated in digital yuan, and the U.S. dollar maintains 49.1% of SWIFT payments. Project Agorá represents the Western counterweight: seven central banks including issuers of five major reserve currencies, demonstrating atomic settlement across tokenized central bank reserves and tokenized commercial bank deposits on a unified two-layer ledger. The question is not whether tokenized cross-border settlement will happen, but under whose governance framework.

3. The Convergence Thesis: Decentralization Strengthens Compliance

The common view that decentralization conflicts with regulation is wrong. Well-designed distributed ledger technology improves regulatory enforcement beyond the capacity of traditional financial systems via two core mechanisms.

3.1 On-chain Traceability

Blockchain stores permanent, fully auditable transaction records, unlike opaque traditional cross-border banking which needs weeks to trace fund flows via multiple banks. Blockchain analytics delivers real-time transaction tracking with over 98% detection accuracy. Only 0.14% of crypto on-chain transactions are illicit, and the T3 Financial Crime Unit has frozen more than $450 million in illegal crypto assets since 2024. The FATF also endorses blockchain-based retroactive transaction monitoring for anti-money laundering compliance.

For balance, matched comparison shows crypto’s illicit transaction rate climbs to 0.86%, five times that of traditional fiat transactions. Privacy tools and incomplete global VASP licensing also weaken transparency. Still, blockchain’s biggest edge is full transaction traceability, rather than a naturally lower illegal activity rate.

3.2 Programmable Compliance

This more transformative approach builds regulatory rules into smart contracts, shifting compliance from post-transaction audits to automatic pre-transaction checks. Major global regulators including Bermuda Monetary Authority, UK FCA, EBA, HKMA and MAS recognize this compliance-by-design model. MAS launched its programmable compliance toolkit in November 2025 with top global banks, while the BIS also verified such embedded regulatory design for cross-border transactions through Project Mandala.

The directional convergence across seven-plus jurisdictions is unmistakable: compliance as infrastructure rather than compliance as enforcement. BlackRock BUIDL’s on-chain whitelist — transfers to non-approved addresses automatically revert — has become the template for institutional tokenized funds. JPMorgan processes KYC documentation for the same institutional client 437 times annually across different business lines at $183 per verification; decentralized identity infrastructure could eliminate an estimated $12–15 billion in annual global KYC spending. The industry is transitioning from “compliance as a function” to “compliance as infrastructure.”

4. The Super Centralized Organization: Strategic Implications

This analysis reveals an emerging supervisory mesh: a collaborative network of regulators, central banks and infrastructure providers delivering shared real-time oversight of tokenized finance, rather than a single centralized authority. Based on Vitalik Buterin’s blockchain theory, DLT systems are politically and architecturally decentralized but logically centralized with one unified transaction state, granting far stronger regulatory oversight than traditional financial systems.

The BIS unified ledger materializes this model by integrating CBDCs, tokenized deposits and securities for unified central bank money settlement. Project Agorá confirms cross-border feasibility: seven central banks and over 40 financial institutions share a single settlement state while running independent confidential AML controls. A joint BIS paper also identifies coded regulatory embedding and real-time on-chain monitoring as core design standards for future financial infrastructure.

Supervision is shifting from periodic entity-based audits to real-time infrastructure-led oversight. Regulators can track capital flows, detect systemic risks early and deploy automatic interventions pre-crisis. As backed by IMF, Citi and HKMA, programmable on-chain transactions feature built-in compliance checks and native audit trails, replacing lagged manual regulatory reporting.

For exchanges and clearinghouses, 24/7 wholesale CBDC after-hours settlement will soon become a mandatory competitive edge. Starting from derivatives markets, this innovation will expand to funding tools, bonds and equities, leaving venues without round-the-clock central bank settlement at a disadvantage. Regulators need customized on-chain supervision instead of copied traditional financial rules, requiring cross-border regulatory alignment and upgraded on-chain data analysis capabilities.

Retail investors gain 24/7 tokenized stock trading access globally, with the market projected to hit $5.5 trillion by 2030. However, persistent risks remain: liquidity fragmentation, severe flash crashes and off-chain information gaps weaken full regulatory governance, despite improved on-chain transparency. While tokenized finance sees unsustainable sky-high short-term growth, its enduring value lies in automated settlement and compliance, tamper-proof audit trails, and cross-border unified compliance frameworks. The ongoing financial overhaul requires firms to embed compliance into underlying protocols, and regulators to build native real-time infrastructure supervision. This systemic transformation is already in progress.

5. Reference

1.HKMA; HKEX. HKEX and HKMA Launch Pilot Project to Enable Digital Payment Solution for Derivatives After-Hours Trading. June 18, 2026.

2.BIS. Advancing in tandem — results of the 2024 BIS survey on CBDCs and crypto. February 2025.

3.BIS. Project Agora: A shared programmable platform for wholesale cross-border payments. May 2026.

4.Swiss National Bank. Project Helvetia: Integrating wholesale CBDC into central banking operations. 2020.

5.MAS. MAS Announces Successful Live Trial of Settlement of Interbank Overnight Lending Using Wholesale CBDC. November 13, 2025.

6.CoinGecko. CoinGecko 2026 RWA Report. April 2026.

7.Citi Institute. Tokenization 2030 Report. June 2026.

8.HKMA. e-HKD Pilot Programme Phase 2 Report. October 2025.

9.BIS. Blueprint for the future monetary system: improving the old, enabling the new. Annual Economic Report 2023, Chapter III.

10.Carstens, A. & Nilekani, N. Finternet: the financial system for the future. BIS Working Papers No 1178. 2024.

11.Chainalysis. 2025 Crypto Crime Report. January 2025.

12.Buterin, V. The Meaning of Decentralization. 2017.

13.CIGI. Regulating Compliance in a World of Decentralized Finance. Paper No. 355. May 2026.

14.Citi. How Programmable Money Will Redefine Compliance and Control. 2025.

15.FSB. Financial Stability Implications of Tokenisation. April 2025.

And more.

DISCLAIMER

Past performance does not guarantee future results.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any cryptocurrencies. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

Unless otherwise stated, all data is as of October 7, 2024 or as of most recently available.