The Hong Kong authorities has shifted its focus to decentralized finance (DeFi) and metaverse applied sciences to strengthen its world fintech standing.
Latest studies from the Hong Kong Institute for Financial and Monetary Analysis (HKIMR), the analysis division of the Hong Kong Academy of Finance (AoF), help this transfer.
The HKIMR report on DeFi notes its substantial development, with market capitalization hovering from $6 billion in 2021 to over $80 billion in 2023. Regardless of this speedy growth, DeFi at present represents solely 4% of the general crypto-asset market. The report means that over 70% of crypto companies should absolutely discover DeFi’s prospects.
The report acknowledges DeFi’s challenges, together with governance, compliance, and vulnerabilities. Nonetheless, it stays optimistic about DeFi’s potential to introduce modern monetary companies. These companies can improve automation and monetary inclusion, making them a noteworthy facet of future monetary methods.
Metaverse Engagement Amongst Monetary Establishments
The second HKIMR report focuses on the metaverse, revealing a reasonable stage of engagement amongst Hong Kong’s monetary establishments. Regardless of curiosity, greater than half of the respondents (51%) expressed skepticism relating to the metaverse’s future potential. Nonetheless, some segments of Hong Kong’s fintech business actively pursue developments associated to the metaverse, indicating a rising recognition of its prospects.
Enoch Fung, CEO of the AoF and govt director of the HKIMR, commented on the synergy between rising applied sciences and monetary companies.
“The rising applied sciences of DeFi and the metaverse, that are intently linked to the broader digital asset and Web3 developments, will seemingly current varied alternatives for the monetary companies business in Hong Kong.”
Selling Hong Kong within the Worldwide Tech Scene
Hong Kong’s authorities officers have taken steps to advertise town as a first-rate location for fintech and Web3 startups. Representatives attended the Collision 2024 tech convention in Toronto, showcasing Hong Kong’s readiness to function an offshore know-how hub for Canadian crypto and Web3 businesses. The occasion was co-hosted by the Hong Kong Financial and Commerce Workplace in Toronto (Toronto ETO), Make investments Hong Kong (InvestHK), and StartmeupHK (SMUHK).
Regardless of positioning itself as a crypto-friendly hub, Hong Kong has skilled a sequence of crypto trade closures. In March 2024, HKVAEX, allegedly affiliated with Binance, withdrew its license software. This was adopted by the exit of IBTCEX, QuanXLab, Huobi HK, Gate.HK, OKX HK, and Bybit (Spark Fintech Restricted) in Could. These departures go away 17 digital asset buying and selling platforms on the applying checklist, with 11 corporations withdrawing or returning their license functions.
The withdrawal of license functions has raised considerations about Hong Kong’s cryptocurrency licensing system. Hong Kong Legislative Council member Wu Shuo has publicly criticized the system, arguing that it undermines market confidence. The latest closures and withdrawals have highlighted crypto companies’ challenges in navigating Hong Kong’s regulatory panorama.
