PANews reported on January 9 that according to a Hong Kong government press release, the Hong Kong Monetary Authority launched the Distributed Ledger Technology Regulatory Incubator (Incubator) to assist banks in responsibly exploring the potential of distributed ledger technology (DLT). The purpose is to assist banks in fully realizing the potential of DLT and effectively managing related risks.

It is reported that the incubator will enhance the risk management capabilities of individual banks and the banking industry as a whole, especially the risks that may arise when banks launch services that involve both DLT banking infrastructure and traditional banking infrastructure (such as deposits and loans). For individual banks, the incubator will provide a one-stop regulatory platform, allowing banks to confirm that relevant risk management measures have been fully implemented before fully launching DLT projects, communicate with the HKMA’s dedicated team and obtain regulatory advice, and choose to conduct real-world testing as needed to verify and improve risk management measures in a pragmatic and continuously evolving manner. The incubator will also launch a series of targeted measures to promote the banking industry’s awareness and understanding of DLT risk management best practices, including regulatory guidelines, industry sharing sessions and forward-looking research projects, which will help enhance the banking industry’s ability to introduce DLT solutions in the long run.