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- The HKMA’s latest e-HKD report reveals insights from 11 experimental pilots, among them a Chainlink-powered cross-chain initiative.
- Chainlink’s CCIP is being used in this pilot to bridge transactions between different blockchain networks securely.
Hong Kong’s central banking authority (HKMA) is continuing its exploration of a digital version of the electronic Hong Kong dollar called e-HKD. The HKMA first launched the e-HKD pilot in 2023 to explore how a central bank digital currency (CBDC) could work in practice.
In September 2024, the project expanded into Phase 2, renamed e-HKD+, to test more advanced scenarios involving tokenized assets, programmability, and interoperability. Just yesterday, the Hong Kong Monetary Authority released a report announcing the completion of the e-HKD Pilot Program and outlining the future direction of e-HKD.
Among several pilot consortia, 11 in total, one group comprises Visa, ANZ, ChinaAMC (HK), and Fidelity International, which is focused on cross-border settlement of tokenized assets between Australia and Hong Kong.
In this use case, the goal is to allow Australia-based investors to purchase units of a Hong Kong-based tokenized money market fund (MMF) using either e-HKD or tokenized deposits, with near-real-time settlement, removing the friction of traditional cross-border settlement.
Chainlink’s Role: CCIP & Compliance
Chainlink’s advanced, particularly its Cross-Chain Interoperability Protocol (CCIP), plays a crucial role in this pilot by enabling secure, regulated transactions across different blockchain networks.
In a post on X, Chainlink explained,
By unifying these capabilities under a single standard, Chainlink enables institutional-grade tokenized asset transactions end-to-end at scale, unlocking the next generation of regulated tokenized finance.
Some specific functionalities Chainlink contributes to cross-chain messaging and settlement. This allows value and data to move between permissioned networks like private banking systems and public blockchains such as Ethereum.
It also helps enforce automated compliance by integrating KYC and AML checks directly into on-chain processes, ensuring all token movements adhere to regulatory standards.
Previously, we highlighted that CCIP enables atomic settlement, or Delivery-versus-Payment (DvP), meaning that the exchange of e-HKD or stablecoins and the delivery of tokenized assets happen simultaneously, reducing counterparty risk and ensuring transactions are completed efficiently.
In practice, the pilot connected ANZ’s private chain infrastructure (dubbed “DASChain”) to a public testnet (Ethereum Sepolia) via CCIP, allowing an Australian investor to swap an A$-pegged stablecoin (A$DC) for e-HKD and then invest it in a tokenized MMF.
Visa’s Tokenized Asset Platform (VTAP) serves as a key intermediary in the pilot, providing APIs that allow institutions to mint, burn, and transfer tokens across both permissioned and public blockchain networks. With the market for tokenized funds projected to reach US$2 trillion by 2030, insights from this pilot play a role in shaping the frameworks of digital finance.
Beyond the e-HKD initiative, Chainlink has collaborated with other institutions like SWIFT, DTCC, Euroclear, UBS, and the U.S. Department of Commerce to expand its influence in the tokenization of traditional financial systems (TradFi).
Recently, Chainlink also partnered with Balcony to integrate its Chainlink Runtime Environment (CRE) into Balcony’s Keystone platform. As part of their partnership, Balcony will bring more than $240 billion worth of real estate assets onto the blockchain.
Chainlink’s native token, LINK, has seen short-term volatility, recently slipping 3% to $17.70. Still, the network currently secures over $62.39 billion in total value, with Aave V3 accounting for 62.53% of that amount.
