Hong Kong wants to become a global fintech hub. It's focusing on crypto-related sectors like decentralized finance (DeFi) and the Metaverse.
Recent government-backed studies highlight these digital frontiers' importance.
The Hong Kong Institute for Monetary and Financial Research (HKIMR) released reports on June 25. These analyze DeFi and Metaverse technologies' impact and potential. The reports show rapid growth and emerging opportunities in these sectors.
DeFi's market capitalization has grown significantly. It rose from $6 billion in 2021 to over $80 billion in 2023. This expansion underscores the sector's potential. However, DeFi only accounts for 4% of the overall crypto-asset market.
Most crypto businesses in Hong Kong haven't explored DeFi yet. About 71% of surveyed firms are not active in this space. The report remains optimistic about DeFi's capabilities.
DeFi could "re-organize" financial services with innovative features. These include "liquid staking, flash loans, and automated market makers". Such innovations promise faster transactions and increased financial inclusion.
The Metaverse study reveals mixed sentiments. Local financial institutions show high interest but moderate engagement. Over half of the survey respondents are skeptical about its potential. However, some Hong Kong fintech businesses are proactively pursuing Metaverse-related developments.
Enoch Fung, CEO of the AoF and executive director of the HKIMR, emphasized the importance of these technologies. He stated: "The emerging technologies of DeFi and the metaverse... will likely present various opportunities for the financial services industry in Hong Kong."
Hong Kong aims to become a central cryptocurrency innovation hub. Recent regulatory milestones support this goal. The Hong Kong Securities and Futures Commission (SFC) has granted initial approvals to 11 cryptocurrency exchanges.
Industry leaders suggest further developments. Hong Kong could soon introduce staking options for spot Ethereum exchange-traded funds (ETFs). This would enhance the attractiveness of crypto-based financial products in the region. Not to mention the global aim to elevate Hong Kong's status alongside global crypto hubs like Singapore and Dubai. They play a big game, you know.