Hong Kong is positioning itself as a pacesetter within the world fintech panorama by specializing in crypto-related sectors reminiscent of decentralized finance (DeFi) and the Metaverse.
Current government-backed research carried out by the Hong Kong Institute for Financial and Monetary Analysis (HKIMR), a part of the Hong Kong Academy of Finance (AoF), have underscored the significance of those digital frontiers in shaping the way forward for finance in Hong Kong.
The studies launched on June 25 analyze the impression and potential of DeFi and Metaverse applied sciences, highlighting their speedy progress and rising alternatives.
Hong Kong’s Push Into DeFi And The Metaverse
The analysis on DeFi revealed a notable improve in market capitalization, from $6 billion in 2021 to over $80 billion in 2023, signaling an growth that underscores the sector’s potential.
Regardless of DeFi accounting for under 4% of the general crypto-asset market, it stays largely untapped, with roughly 71% of crypto companies in Hong Kong surveyed not but exploring this avenue.
The report stays optimistic about DeFi’s capabilities to “re-organize” monetary providers with improvements reminiscent of “liquid staking, flash loans, and automatic market makers,” promising diminished transaction instances and elevated monetary inclusion.
In parallel, the examine on the Metaverse reveals that whereas native monetary establishments have proven excessive curiosity, their engagement stays average.
Nevertheless, over half of the survey respondents expressed skepticism concerning the Metaverse’s potential, a sentiment not reflective of some Hong Kong fintech companies’ proactive stance.
These corporations are keenly pursuing Metaverse-related developments, exploring how digital environments can play a pivotal function in monetary providers.
Enoch Fung, CEO of the AoF and govt director of the HKIMR, emphasised the intertwined nature of DeFi, the Metaverse, and broader Web3 applied sciences as essential for the way forward for Hong Kong’s monetary providers trade. Fung significantly famous:
The rising applied sciences of DeFi and the metaverse, that are carefully linked to the broader digital asset and Web3 developments, will possible current numerous alternatives for the monetary providers trade in Hong Kong.
Strikes To Cement Crypto Hub Standing
Hong Kong’s broader technique consists of changing into a central cryptocurrency innovation and exercise hub. This intention is supported by current regulatory milestones, such because the Hong Kong Securities and Futures Fee (SFC) granting preliminary approvals to 11 cryptocurrency exchanges.
This improvement is an element of a bigger effort to situation digital asset buying and selling platform (VATP) licenses, which started in 2022 and goals to help Hong Kong’s stature alongside main world crypto hubs like Singapore and Dubai.
Additional selling this surroundings, trade leaders counsel that Hong Kong might quickly introduce staking choices for spot Ethereum exchange-traded funds (ETFs), enhancing the attractiveness and performance of crypto-based monetary merchandise within the area.
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