Core Insights - Standard Chartered Hong Kong, BlackRock, and Mastercard have completed the second phase of the Hong Kong Monetary Authority's "Digital Hong Kong Dollar" pilot program, exploring the application of simulated "Digital Hong Kong Dollar" in tokenized fund subscriptions and redemptions [1] - The research team identified benefits for various stakeholders in the value chain, including fund distributors, fund issuers, payment network providers, and tokenization service providers [1] Group 1: Benefits Identified - For fund distributors, digital currencies like "Digital Hong Kong Dollar" and tokenized deposits offer greater flexibility and faster settlement, enabling T+0 subscriptions and redemptions [1] - For fund issuers, digital currencies can enhance customer experience, extend trading periods, shorten settlement times, provide transparent transaction statuses, and allow for fractional fund unit holdings [1] - For payment network providers, using blockchain technology, such as Mastercard's Multi-Token Network (MTN), can achieve near real-time settlement when utilizing "Digital Hong Kong Dollar" and tokenized deposits, facilitating ecosystem development [1] - For tokenization service providers, tokenization allows clients to hold fractional fund units and expands investor access to such investments through traditional and digital channels [1] Group 2: Challenges to Address - The transition to mainstream tokenized fund settlements requires addressing several practical issues, including the need for real-time net asset value (NAV) calculations instead of end-of-day pricing [2] - Operational transformation is necessary to support instant settlements, requiring a redesign of the entire fund cycle's operational model, liquidity risk monitoring, cash flow forecasting, and enhanced governance and risk management frameworks [2] - Interoperability and network integration must establish unified standards to connect stakeholders in the value chain and local and cross-border payment networks while complying with regional requirements [2] - Regulatory standards need to maintain consistency in data privacy and settlement to strengthen institutional and investor confidence [2]