Summary:
- Several digital asset developments took place over the past two weeks in Hong Kong, which includes Hong Kong FinTech Week, the Global Financial Leaders Investment Summit, and a Policy Statement released by Hong Kong’s Financial Services and Treasury Bureau (FSTB) explaining their stance on Virtual Assets (VAs).
- During Hong Kong FinTech Week, large institutions such as HSBC, Citi, and DBS Bank touted the growing role of Web3 for consumers
- Senior government officials have made it clear through their Policy Statement that they want to transform Hong Kong into a global virtual asset hub
1. Experts in the region believe there are “massive” opportunities from Web3
Hong Kong has historically been a city for crypto pioneers. Bock.one, IOHK, Crypto.com, and Amimoca Brands was founded and grown in the Hong Kong Ecosystem. CoinDesk recently named four universities in Hong Kong as the Top 20 Universities with the Biggest Impact on Blockchain. The recent Hong Kong FinTech week highlighted that this unique ecosystem that facilitates the flourishing of digital asset development will only continue to grow. High-level Hong Kong government officials, founders of fast-growing startups, and leaders at international banking institutions attended and spoke on the opportunties from Web3.
Notable takeaways
- Eddie Yue, Chief Executive of Hong Kong Monetary Authority (HKMA), highlighted the importance of staying open-minded to new FinTech ideas with a focus on mass adoption, and creating a commercially viable arrangement for the development of Commercial Data Interchange (CDI) for the city’s data infrastructure;
- Julia Leung, Deputy CEO of Securities and Futures Commission (SFC), shared that the metaverse and NFTs are reshaping our society, whilst the digital asset ecosystem is building institutional-grade infrastructure. This development inspired the SFC to be more supportive of DLT projects and digital asset service providers;
- Yat Siu, co-founder and Executive Chairman of Animoca Brands, addressed the big opportunity actually to own one’s virtual assets without overcomplications in intermediaries;
- HSBC, Citi and DBS Bank touted the massive opportunities from the metaverse and Web3, to uplift traditional customer engagements from 2-dimensional into a fully immersive experience. The banks also envisioned much tighter online and offline touchpoints switching seamlessly between existing channels and the metaverse;
- Fidelity International launched an exchange-traded product that offers exposure to Bitcoin. The ETP is backed by Bitcoin and is the first of its kind to be made available in Hong Kong;
Hong Kong’s ongoing role in cross-border blockchain infrastructure and use case innovation will be best exemplified within the Greater Bay Area (GBA) as part of the city’s push to become a digital international financial center.
The Crypto Council at Fin Tech Week
HKMA invited the Crypto Council to share our collective views on the global regulatory landscape and our engagements with policymakers in the areas of cryptocurrencies, stablecoins, and CBDCs. Linda Jeng, CCI’s Chief Global Regulatory Officer & General Counsel, was interviewed on the main stage to discuss legal and regulatory considerations for the evolution of money to “digital money”:
Sean Lee, CCI’s Senior Advisor who’s based in Hong Kong, shared a panel on the Web3 stage with Fidelity International, JP Morgan, Digital Asset and BCG Digital Ventures to discuss how policymakers can provide more clarity for better adoption in a rapidly growing industry, and primary opportunities and challenges for digital assets and blockchain in the coming years:
2. Hong Kong’s is looking to reinvigorate its status as a premier financial hub
In addition to having a sizeable presence with speakers at FinTech week, the government continued simultaneously articulated their views via an official government policy statement. On October 31st, Hong Kong’s Financial Services and Treasury Bureau (FSTB) released a document explaining their policy stance toward developing an ecosystem for Virtual Assets (VA). The policy statement echoed what several government officials made evident during FinTech week—the government is looking to reinvigorate its status as a premier financial hub and as a dominant gateway between mainland China and the international markets, despite geopolitical risks that exist across the globe today.
Hong Kong recognizes VAs are here to stay and are ready to “calibrate” the legal and regulatory regime to facilitate an environment that caters to the evolving and innovative approach of VAs. Hong Kong refers to its approach as using the “same activity, same risk, same regulation” standard. This principle is associated with the idea that similar requirements should be imposed upon all active players in a particular segment, regardless of the legal nature of those entities.
Additionally, opening up virtual assets to retail investors is no longer “off-the-table”. A consultation from the Securities and Futures Commission is being conducted to seek industry feedback on appropriate guardrails to protect retail investors while making this new asset class inclusive and accessible. This will most likely take shape at first via Exchange-Traded Products (ETPs) rather than direct exposure. Fidelity is one of the first institutions to launch such products, announced just before HK FinTech Week.
3. Regulation is in the pipeline
Regulation is also in the pipeline for “money on a blockchain,” either as stablecoins or as e-HKD (the upcoming central bank digital currency). Implementation of e-HKD is already underway via MBridge pilot, bringing together various CBDCs such as China’s eCNY, UAE’s AED, and Thailand’s THB to facilitate cross-border payments. Other technological developments under review by the Hong Kong government include the tokenization of Green Bonds, ETPs, NFTs, and property rights for tokenized assets.
As the regulatory landscape continues to evolve in Hong Kong, Singapore and the broader Asia Pacific region, CCI will share our research and insights through engagements with members, partners, and respective policymakers in our community.
