Solution Highlights:
For the purposes of the e-HKD (“e-HKD”) Pilot Programme, ARTA-Emali HK Limited* developed a hypothetical e-HKD smart contract-based platform with key features:
- Atomic settlement of fund transactions via hypothetical e-HKD and regulated tokenized funds.
- Smart-contract programmability to streamline inter-intermediary operations.
- Digital identities with verifiable credential (VC) for onboarding and compliance
What benefits could a hypothetical e-HKD bring?
Programable payment with hypothetical e-HKD could make investment more time efficient and cost effective for both investors and fund managers.
Atomic Settlement:
- Near-instant Delivery vs. Payment: hypothetical e-HKD and regulated fund tokens could be moved instantly via smart contract, potentially for faster settlement and lower costs.
- Interconnecting front-to-back financial intermediaries: e-HKD could facilitate straight-through processing across placing agents, fund managers, administrators, and custodian.
- Financial Inclusion: investors could earn competitive interest income even for a small balance and/or for a short period of time.
- One-go Instruction: hypothetical e-HKD embedding smart contract functionality could record full-cycle flows at order initiation and execute them automatically.
Reduced Counterparty Risks and Increased Transparency:
- Increased transparency for the investor: investors could instantly receive fund token as order and NAV confirmation.
- Designated use of investor’s money: investors’ hypothetical e-HKD would only be released to fund managers upon successful issuance of regulated fund tokens.
- Confidence for fund manager to strike NAV asap: fund managers are shown solid proof that investor’s hypothetical e-HKD is escrowed in the smart-contract vault for settlement.
- Zero credit risk with e-HKD: hypothetical e-HKD, should it be issued, should be cash equivalent without credit risk, unlike stablecoins or cryptocurrencies.
Simplified Client Onboarding and Product Suitability:
- Reducing repetitive onboarding entries: Investors’ VC could apply across multiple brokers and fund managers for potentially faster KYC, AML & suitability process.
- Enhancing suitability control: VC directs e-HKD smart contract to show and trade appropriate fund products based on investors’ suitability.
Operational Workflow
Survey Results
- 10+ financial institutions are interested in faster settlement and lower counterparty risks.
- 70+% survey users including retail prefer instant confirmation of their investment orders.
Next Steps and Further Studies
- Explore models for self-custody of e-HKD to provide consumers with more choices and control.
- Develop a digital identity to carry out AML/CTF/suitability processes with data privacy.
- Study feasibility of a decentralized and modular approach to issuing identities and its attributes.
*ARTA-Emali HK Limited is the entity participating in HKMA e-HKD Pilot Programme. It is a wholly owned subsidiary of Arta TechFin Corporation Limited (HKSE: 0279).
Find our press release here.
About Arta TechFin Corporation Limited
Arta TechFin is a hybrid financial (HyFi) platform bridging traditional finance with blockchain-based financial system via technology innovations. Its regulated one-stop solution enables corporates, financial institutions, and family offices to access traditional assets and digital assets.
ARTA, through its various subsidiaries, are licensed under Hong Kong Securities and Futures Commission. Other licenses include Hong Kong Stock Exchange participant, insurance brokerage license, trustee license and money lending license in Hong Kong as well as Eurex participant in Germany.
About Emali Limited
Emali is an enterprise technology company specializing in the development of Web3 solutions for enterprises using its proprietary Trust Solutions technology stack. The company has developed and deployed multiple distributed systems for government agencies, financial institutions, and large corporations.
Media Enquiry:
Ayishah Ma
ir@artatechfin.com
(852) 3513 8010
This press release is prepared in English and is translated into traditional and simplified Chinese. In the event of inconsistency between the English version and the translated versions, the English version prevails.