Best practices for digital asset v/s tokenized funds in Hong Kong.
2 case studies for each type of funds are explained.
• Digital asset (DA) funds directly invest in digital assets like Bitcoin, ether and other crypto, to provide exposure using traditional ownership and off-chain methods.
Best practice #1: API driven automated reconciliation.
Best practice #2: Frequence of reconciliation = at least 1 per valuation cycle.
Best practice #3: Multi source pricing for valuation.
Best practice #4: Know ur transaction checks on self custody wallets.
Best practice #5: Due diligence and SOC reporting.
• For tokenized funds (TK) funds invest in traditional instruments eg stocks, bonds to provide exposure using on-chain infrastructure.
Best practice #1: Multi-party token mint/burn management (at a minimum approval from the transfer agent).
Best practice #2: Real time mint/burn using smart contracts.
Best practice #3: Real time token balance monitoring.
Best practice #4: Real time NAV reconciliation using oracle integration.
Best practice #5: Smart contract standardization and due diligence.
Best practice #6: On-chain risk analytics on self hosted wallets.
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