Ashurst advises Goldman Sachs on the use of tokenisation platform (GS DAPTM) in the world's first tokenised green bond issued by a government under Hong Kong's Government Green Bond Programme
16 February 2023
16 February 2023
Global law firm Ashurst has advised Goldman Sachs on the use of their new tokenisation platform, GS DAPTM, in respect of the first tokenised green bond issued by a government globally. The successful offering of a HK$800 million tokenised* green bond (the Tokenised Green Bond) is under Hong Kong's Government Green Bond Programme (GGBP).
GS DAPTM is used to facilitate the use of cash tokens issued by the Hong Kong Monetary Authority (HKMA) for settling primary issuance and secondary trading as well as making payment for coupons and redemption. Ashurst also previously advised Goldman Sachs on the development and launch of the GS DAPTM.
Hong Kong's Financial Services and the Treasury Bureau has described this as a pilot issuance to test the compatibility of Hong Kong's current legal and regulatory framework, financial infrastructure and market operational practice in order to promote Hong Kong as Asia's digital-asset and sustainable financing capital.
The primary issuance was settled on a delivery-versus-payment (DvP) basis between securities tokens* representing beneficial interests in the bond and cash tokens representing a claim for HKD fiat against the HKMA, on a T+1 basis across a private blockchain network. During the bond lifecycle, processes including coupon payment, settlement of secondary trading and maturity redemption will be digitalised and performed on the private blockchain network.
The Tokenised Green Bond is cleared and settled through the Central Moneymarkets Unit (CMU) of the HKMA, and the settlement of transactions made through the CMU benefits from statutory settlement finality under Hong Kong law. The on-chain records on the private blockchain network will be the legally definitive and final records of ownership of the securities tokens and cash tokens for the parties on the platform.
The Ashurst multidisciplinary and cross-border team was led by bank industry global co-chair Etay Katz and financial regulatory partner and Hong Kong managing partner Ben Hammond, assisted by counsel Sid Ulker and senior associates Colin Hung and Jamie Jefferson Ng. The wider team included Hong Kong-based debt capital markets partner and global finance, funds and restructuring finance division co-head Jini Lee, London-based digital economy partner David Futter, capital markets partner Alex Biles and commercial litigation partner James Levy, Melbourne-based partner Jeff Lynn who advised on environmental and climate change law, Hong Kong-based global loans senior associate Carmen Yu and global markets associate Janet Ouyang, London-based financial regulatory associates Joy Yeh and Clara Yeo, digital economy senior associate Denae Erasmus and dispute resolution senior associate Joshua Kang, and Frankfurt-based financial regulatory senior associate Sophie Skeet.
Commenting on this landmark deal, Ben Hammond said: "We are delighted to continue our longstanding relationship with Goldman Sachs to deliver this first of its kind tokenised bond issuance in Asia. This issuance marks a significant breakthrough in capital market innovation for Hong Kong, laying a solid foundation for asset digitisation for other market participants in the region, and showcases Ashurst's expertise at the cutting edge of law, technology and digital finance."
Etay Katz added: "Our continued partnership with Goldman Sachs underlines a strong shared conviction and vision for the role digital assets will play in transforming financial markets. This is an exciting time for digital finance and it's been great to work with the GS team again after successfully delivering the multi asset class digital platform, GS DAPTM, helping them to achieve their digital asset strategy."
*Note: Where the beneficial interests in the bond are recorded on settlement in the tokenised securities accounts on a private blockchain network. Wherever the term “tokenised” appears in this press release, this footnote applies.