The HKMA has launched the Supervisory Incubator for Distributed Ledger Technology, known as the Incubator, on January 8. Its purpose is to assist banks in responsibly utilizing the revolutionary capabilities of DLT.
This supervisory arrangement will help banks manage the potential risks of DLT adoption and strengthen risk management abilities at both the individual bank and industry levels.
It will specifically focus on addressing risks that may arise as banks implement services that involve both DLT-based and traditional banking infrastructures, such as tokenized deposits which have garnered significant interest from the industry.
At the individual bank level, the Incubator will serve as a comprehensive platform for obtaining supervisory feedback and conducting trials to ensure the adequacy of risk management controls before launching a DLT-based initiative.
This will involve a dedicated HKMA team and a hands-on approach, allowing banks to validate and improve their risk management implementation as needed.
